Claim No: 04/P8/449
IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE
Clifford’s Inn, Fetter Lane
London, EC4A 1DQ
Before :
MASTER WRIGHT, COSTS JUDGE
Between :
| MR KETAN LAKHANI | Claimant |
| - and - |
|
| EVERSHEDS | Defendant |
Mr Neil (instructed by Russell Jones & Walker) for the Claimant
Mr Little (instructed by Eversheds) for the Defendant
Hearing date : 11 August 2004
Judgment
Master Wright
The Claimant, Mr Ketan Lakhani (to whom I shall refer to as "KL") instructed the Defendants Eversheds in September 2002 with regard to matters relating to his employment. He was at that time employed by Tilda Ltd which (in his statement dated 15 July 2004) he describes as a UK private company in the business of importing rice from India, Thailand, the USA, Canada and Italy for the purposes of processing, packing and retail.
KL was the business manager of Tilda Ltd. He had held that position since 1988 and he reported directly to the Board of Directors. The company had (according to his statement) a total turnover of £60,000,000 including exports and approximately 200 employees based at Rainham in Essex.
In his statement KL describes how he suffers from a depressive illness known as Unipolar Affected Disorder which is a form of very severe depression whose symptoms are poor concentration, memory loss, an inability to make decisions, loss of appetite, insomnia and a general loss of interest in life or family. This has severe debilitating effects and means that he is unable to work during any acute periods.
From 1993 until the date of his statement KL had suffered from three attacks of this illness which necessitated him being absent from work for some time. His last attack occurred from the end of September 2001 and he was certified as unfit for work in January 2002.
KL states that in or around August/September 2002 he felt that he was recovering and wished to return to work in his original role in January 2003. However his employer told him that it proposed to make him redundant in July 2003.
He consulted Eversheds and attended a meeting with Fiona McMutrie at their offices on 27 September 2002. She then sent him their "Terms of Engagement" with a formal "client care" letter dated 30 September 2002.
Relevant sections of the "client care" letter are as follows:
"At our meeting on Friday 27 September 2002 we discussed what is likely to be involved. I now confirm the basis on which this firm will be acting for you. I enclose a copy of our Terms of Engagement. Please let me know if there are any points which you would like to discuss.
Responsibility for your work
I will have the day to day conduct of this matter and be your prime point of contact. Catherine Prest will be the client contact partner as described in the Terms of Engagement and will be responsible for overall supervision. I may also ask other colleagues to assist where appropriate, particularly as regards legal issues which are more effectively dealt with by another of our teams specialising in those issues or where it is cost effective from your point of view.
Charges
As mentioned in our Terms of Engagement, our charges will be calculated primarily by reference to the time spent on the matter, although other factors may be taken into account. For example if the matter is particularly complex or urgent or of high value an additional mark up may be added. Charging rates vary between lawyers. Current typical hourly rates (excluding VAT) of those likely to be involved are: partner £375 to £475, assistant solicitors £175 to £275 depending on their seniority and trainee solicitors £110. My current hourly rate is £210 and Catherine’s is £395 ………………………………………………………………………………………………………………………………………………………………………
Estimate of costs
In matters such as this it is difficult to estimate how many hours of work will be necessary to complete the matter. At present I have recorded 2.5 hours of work. I estimate fees excluding VAT and disbursements (expenses) of approximately £500 to £1,000 for preparing a letter confirming my advice, assuming no unforeseen circumstances arise.
This should not be regarded as a firm quotation but as a general guide only for initial budgeting purposes. We should be able to provide you with a further estimate should any additional work be required in the future."
Eversheds delivered four bills to KL between 13 November 2002 and 11 April 2003 (inclusive). Those bills total £5,543.07. They have all been paid for more than one year and KL does not ask for detailed assessment of them having been advised by his legal advisers that in these circumstances an order for detailed assessment cannot be made.
Thereafter Eversheds delivered ten more bills to KL at monthly intervals between 23 May 2003 and 26 February 2004 (inclusive). All of those bills (which total £29,432.01) have been paid but less than one year has expired between the dates upon which they were delivered and 11 June 2004 when this Part 8 claim was issued.
In their "Grounds of Opposition" dated 28 June 2004 Eversheds state as follows:
The invoices included in the Claim Form are for the period 23 May 2003 to 26 February 2004. Payment in respect of the first of those was made on 12 June 2003 and the last on 23 March 2004.
Section 70 of the Solicitors Act 1974 entitles a party chargeable with a bill to an order that the bill be assessed if the application for assessment is made within one month of the bill’s delivery. Otherwise, if no such application is made within the one month allowed, by Section 70(3) the court may, but only in special circumstances, make an order for the assessment of the bill so long as that bill was either delivered within 12 months of the date of the application or paid within 12 months of the date of the application.
The invoices that are the subject of this claim were all delivered more than a month before the date of the claim being issued. The claim was issued on the last possible date for the making of an application under Section 70(3) in respect of the invoice dated 23 May 2003 because it was paid on 12 June 2003."
In his Witness Statement KL sets out his reasons for saying that the court should find special circumstances for ordering a detailed assessment. The first can be categorised as "Costs Information".
KL says (in relation to this first "special circumstance"):
I am informed by my legal advisors that under paragraphs 3 and 4 of the Solicitors Costs Information and Client Care Code the best information possible about the likely overall costs should be given to a client at the outset of the matter, and at appropriate stages throughout. If it is not possible to give a realistic estimate of the overall costs the best information possible regarding the costs of the next stage of the matter should be given.
Following the first estimate given in their letter of 30 September 2002 no further estimate was given until 30 September 2003 by which time nearly £25,000 worth of costs had been incurred."
Mr Neil (who appeared on behalf of KL) said that no complaint was made about the costs information provided in the letter of 30 September 2002. However that letter had gone on to say:
"We should be able to provide you with a further estimate should any additional work be required in the future."
He said that, although additional work had been required, the only further costs estimates which had been provided were given in a telephone conversation between Fiona McMutrie (to whom I shall refer to as "FM") and KL on 13 August 2003 (see the Attendance Note exhibited to FM’s Witness Statement) and FM’s letter to KL dated 30 September 2003 (also exhibited to her Witness Statement).
The relevant passage in the Attendance Note of the telephone conversation on 13 August 2003 (which relates to the negotiations which were going on at that time) says:
"Ketan accepting this but explaining that the £50,000 additional payment is not significant enough to encourage him to sign away his rights. After paying Eversheds’ legal fees (currently in the region of £20,000 and expected to reach at least £25,000 even if settlement is agreed now) leaves Ketan with only £25 – 30,000 which may be subject to tax deduction if Inland Revenue clearance is not obtained. Ketan advising that this is too small a figure to encourage him to sign away his legal rights. He feels that the settlement offer is very one sided for Tilda."
Mr Neil submitted this did not amount to an estimate of future costs at all. It was merely evidence that the Claimant knew he had already incurred costs in the region of £20,000.
He then referred to the letter of 30 September 2003. In that letter FM said:
"As discussed at our meeting, I am unable to confirm any definite time/fee estimate at this stage. If the matter proceeds as anticipated above, I would expect Eversheds’ future costs to be no more than £5,000 plus VAT and disbursements. Such disbursements will include Jeffrey’s fees which, to date, are in the region of £2,012.50 plus VAT. Jeffrey’s anticipated fees for amending the chronology/statement and preparing the letter to Decherts are in the region of £700 - £1050 plus VAT."
Mr Neil pointed out that at the time that letter was written KL had incurred costs of nearly £25,000 and the estimate of a further £5,000 plus VAT and disbursements was inaccurate because a further five bills would be delivered totalling approximately £10,500. He submitted that it had not been sufficient (to comply with the Solicitors’ Costs Information and Client Care Code ("the Code")) for Eversheds simply to deliver monthly bills because this did not enable KL to keep track on how the costs were building up or to anticipate what the likely costs would be.
The second of KL’s reasons for saying that the court should find special circumstances for ordering a detailed assessment can be categorised as "costs benefit advice".
In his Witness Statement KL says:
The next special circumstance which I would submit applies in this case is that when I initially instructed the Defendants I required advice on the potential redundancy situation with Tilda and on possible claims against them. The Defendants subsequently advised on a Compromise Agreement put forward by Tilda as part of my proposed redundancy and on potential claims for unfair dismissal, disability discrimination and personal injury. The main thrust of the initial advice was as to whether acceptance of the Compromise Agreement would preclude me from bringing a personal injury claim against Tilda and on the level of redundancy payments offered. However I was informed by Catherine Prest of the Defendants in or around March 2003 that the Defendants did not undertake personal injury work and therefore it would be necessary for me to be referred to another firm of solicitors in order to pursue such a claim.
Throughout 2003 the Defendant, on my behalf, continued to negotiate on the level of redundancy payments and the Compromise Agreement and, in addition, to put forward the potential claims against Tilda. Counsel was also instructed to advise in this respect.
However, in or around February 2004 it became apparent that no agreement was going to be reached with Tilda and the Defendants informed me that I would need to pursue a personal injury claim against them and, in order to do so I would be required to instruct new solicitors. In addition the Defendants informed me that, should I wish to claim against Tilda for disability discrimination in the Employment Tribunal, it would cost me a further £20,000.
The work detailed above covered the period from November 2002 to February 2004. During that period the Defendants rendered bills on a regular, almost monthly, basis. Those bills totalled £34,975.08.
By the time my instructions to the Defendants were terminated I had made absolutely no progress in my claims against Tilda in spite of the Defendants spending over 15 months advising me and running up the costs of nearly £35,000. I was left in the position of having to start my personal injury claim from scratch with new solicitors.
I am informed by my current solicitors that under paragraph 4(k) of the Solicitors Costs Information and Client Care Code it was incumbent upon the Defendants to discuss with me whether the likely outcome of the claim with which they were dealing would justify the expense involved (ie, the cost benefit ratio). As can be seen from the client care letters I received from the Defendants no discussion of this ever took place and the Defendants continued to run up costs while making no progress with my potential claims.
I would submit that on the face of it this amounts to gross overcharging. ……………………………………
……………………………………………………………………………………………………………………
In conclusion, I would point out that although the bills which are the subject of my application were paid promptly by me this was merely because I did not want disputes regarding outstanding or unpaid costs to affect the Defendants handling of my claims. I am inexperienced in legal matters and did not realise that I should have reserved my right to challenge the cost claimed at the conclusion of the matter."
Mr Neil submitted that there had been no actual discussion about what it would cost to achieve KL’s aims other than the cost of pursuing a claim for personal injuries and the cost of pursuing a claim for unfair dismissal and/or disability discrimination in the Employment Tribunal. Both of those matters had been discussed at the meeting between Catherine Prest (to whom I shall refer as "CP") on 26 March 2003 (the Attendance Note is exhibited to FM’s Witness Statement). During that meeting CP had explained that Eversheds did not do very much personal injury work and that they might need to refer KL to someone beyond the firm.
No discussions had, Mr Neil submitted, taken place which amounted to a "cost benefit analysis" until 4 December 2003 when FM spoke to KL on the telephone (the Attendance Note is exhibited to her Witness Statement).
The Attendance Note includes the passage:
"In the meantime, FM advising that it would not be beneficial for KL further to continue with the already protracted settlement negotiations. FM’s advice is that KL needs to issue proceedings in order to put some pressure on Tilda to negotiate. FM advising that she is happy to continue advising KL in relation to potential unfair dismissal and/or disability discrimination proceedings and that these should be discussed in the New Year. KL has three months from the date of termination of his employment within which to lodge any such claims.
FM advising, however, that KL needs to take specialist advice in relation to personal injury as this is by far the most substantial element of his claim.
KL agreeing with this and agreeing to discuss this with FM next week. In the meantime, FM will forward to KL details of PI specialists."
Mr Neil said that by the time that conversation took place more than £30,000 had been incurred in costs. Paragraph 4(k) of the Code provides:
The solicitors should discuss with the client whether the likely outcome in a matter will justify the expense or risk involved including, if relevant, the risk of having to bear an opponent’s costs."
The third of KL’s reasons for saying that the court should find special circumstances for ordering a detailed assessment can be categorised as "Duplication".
In his Witness Statement KL says:
The last point which I would submit constitutes a special circumstance under the Solicitors Act 1974 is the fact that, on the face of the bills and breakdowns of time attached thereto there is a considerable duplication between Catherine Prest and Fiona McMutrie of the Defendants. In the initial client care letter sent to me on 30 September 2002 it was stated that Fiona McMutrie would have day to day conduct of the matter and that Catherine Prest would be responsible for overall supervision.
I would submit the direct supervision by a partner of a more junior fee earner should not be billed to me. This is particularly the case when it involves the partner duplicating the assistant solicitor’s work in preparation and consideration of documents."
Mr Neil said that numerous instances of duplication of work between CP and FM could be seen from the itemised breakdowns which had been delivered with the bills. He detailed these as follows.
He referred firstly to the bill dated 23 June 2003. The itemised breakdown showed what he alleged to be duplication of work having occurred on 8 May 2003, 12 May 2003 and 13 May 2003.
Mr Neil then referred to the bill dated 11 July 2003. The itemised breakdown showed alleged duplication on 10 June 2003, 17 June 2003, and 18 June 2003.
Mr Neil referred to the bill dated 29 August 2003. The itemised breakdown showed alleged duplication on 1 July 2003, 17 July 2003, 21 July 2003, 24 July 2003 and 25 July 2003.
Finally Mr Neil referred to the bill dated 30 September 2003. The itemised breakdown showed alleged duplication on 28 August 2003, 5 September 2003 and 24 September 2003.
In her Witness Statement dated 2 August 2004 FM refers to KL’s Witness Statement and to the three "special circumstances" upon which he relies.
She then gave her account of the background. She said:
Before I answer each of the supposed special circumstances, it might I suggest be useful to the court to understand some of the background to the handling of Mr Lakhani’s work and how events unfolded.
Mr Lakhani initially approached us in September 2002 and I met with him on 27 September 2002. He requested that we provided him with some limited advice on his employment position. I provided that advice and on 30 September 2002 sent him a letter that conforms with the Solicitors Practice Rules as to the provision of information to a new client. I provided details of charging rates, time incurred to date and the cost of confirming my advice in writing. I enclosed therewith Terms of Engagement. Clause 4 of these provides details of and explains how costs are charged. Clause 11 of these gives information about costs and their recovery.
Having sent this letter to Mr Lakhani, nothing further was heard from him until he contacted Catherine (as opposed to me) again in January 2003 and provided her with a number of documents. Catherine met with him on 27 January 2003 and he explained that his position had now changed and he wanted advice about a number of different matters relating to his situation with Tilda Ltd ("Tilda") his employer. These issues included advice in respect of his potential dismissal, a compromise agreement and various other potential claims. The variety of the new issues and whether we were or were not going to be required to deal with all or only some of them meant it was not possible to give an overall estimate of possible future costs at that time. Catherine was though able to give Mr Lakhani information and an indication of the cost of unfair dismissal proceedings before an employment tribunal.
Catherine was at this stage advising Mr Lakhani directly. I was not involved as there was no justification for my costs being incurred as well as Catherine’s. Whilst a trainee, Natasha Howson, had been involved in the January meeting with Mr Lakhani, her time was not charged.
On 26 March 2003, Catherine together with a trainee, Katie Homan, met with Mr Lakhani and his brother. For the avoidance of doubt, Miss Homan’s attendance was not charged to Mr Lakhani.
In that meeting Mr Lakhani discussed his potential dismissal, the negotiation of a compromise agreement and the various potential claims he was looking to bring against Tilda. These potential claims were unfair dismissal, disability discrimination, statutory redundancy pay and a potential claim for personal injury. During that meeting the subject of costs was raised by Catherine. She warned Mr Lakhani that litigation could be costly and expensive and carry an emotional cost. Mr Lakhani had to consider this carefully. Costs of tribunal proceedings for disability discrimination were estimated to be in the region of £20,000. Catherine though warned Mr Lakhani about the possibility of not recovering these costs. In respect of the personal injury claim Catherine made clear that Mr Lakhani should seek representation from a specialist personal injury law firm. He wanted to know how much it would cost to bring a personal injury claim. Catherine suggested something in the region of £20 – 30,000.
Following that meeting, we were instructed to try and negotiate the settlement agreement with Tilda. I should say that at this stage the potential scope of our instructions had changed considerably from when Mr Lakhani had initially made contact. As well as the estimates given at the meeting on 26 March 2003, Mr Lakhani was being kept abreast of the amount of costs that had been incurred by being billed monthly and was thus provided with details of the costs that had been incurred.
There was then a long period of time in which we sought to negotiate with Tilda the compromise agreement that Mr Lakhani wanted advice upon. Progress was slow because Mr Lakhani was very upset by his treatment by Tilda and there was often difficulty in getting clear instructions from him. Our approach was to try and resolve all of Mr Lakhani’s claims in one final all encompassing settlement. Mr Lakhani though wanted to negotiate in different stages and not as a package. This meant trying to negotiate over certain of his claims whilst simultaneously reserving and protecting his personal injury claim. This was a difficult balancing exercise and it meant that negotiations were protracted. This was, as Catherine advised him on 12 May 2003, inefficient and likely to result in him incurring additional costs.
Mr Lakhani provided on 15 May 2003 comments on a draft letter to Tilda’s solicitors which attempted to progress negotiations. Included in these was a request for a contribution to Mr Lakhani’s fees which were expressed to be £10,903.
The negotiations with Tilda continued to be difficult. Mr Lakhani had unrealistic expectations of what he might recover and refused to accept that Tilda may not increase its settlement offer. Mr Lakhani was by now well enough to conduct some correspondence with Tilda relating to his redundancy. Mr Lakhani still wanted us to assist him with advising on this very basic correspondence. I suggested to him on a number of occasions that it was not a proper use of costs for us to advise on these letters. He was though quite insistent that we looked over them for him. This added to his costs but we carried out the work as this was his express instruction.
In June 2003 Mr Lakhani sent a box of mangoes to Catherine to share amongst the department to express his gratitude for the efforts being made on his behalf. He also around this time sent to my office several large boxes of sweets. This is not I consider the behaviour of somebody who is concerned about the service being provided to him or has been intimidated as to raising costs issues with his solicitors.
On 4 July 2003 I had a telephone conversation with Mr Lakhani. We discussed then the pros and cons of the settlement and pursuing tribunal proceedings. I advised him that he had to be careful about rejecting the settlement because of the future costs and emotional strain of pursuing his claims. I also recommended to him a reduced level of settlement that would be a realistic approach in order to make headway with Tilda. He did not want us though to proceed this way.
On 10 July 2003 I had a further conversation where I again warned him about the risk he was under in respect of costs and the unlikelihood of recovering them in tribunal proceedings. Again I made clear to him that he had to be realistic and make a settlement close to a revised proposal I suggested he make. Mr Lakhani was firm though that he wanted to press on (despite the costs).
On 25 July 2003, Catherine wrote to Mr Lakhani to confirm our advice to him. That letter not only advised on the options open to him but also the costs of proceedings.
I had a further discussion with Mr Lakhani about fees on 13 August 2003. I informed him of the costs to date and that even if we achieved a settlement quickly fees would probably rise to at least £25,000. Mr Lakhani was though intent on pressing forward.
There then followed a meeting on 26 September 2003 between Mr Lakhani and myself. At the meeting I again advised him that in my view we had reached a stalemate in the settlement discussions and that he should not incur additional costs where there was little hope of making progress. I told him I was keen to keep costs to a minimum. Despite this, Mr Lakhani wanted to press on with a further settlement attempt. I followed this meeting with my letter of 30 September 2003 which provided a further revised estimate of costs on the basis of the matter proceeding as outlined in that letter.
On 17 December 2003 I received a telephone call from Mr Lakhani. This advised me of potential disciplinary action against him. This was new and unexpected. It meant an additional layer of issues which we had to consider with him. Around this time, I also received a telephone call from Mr Lakhani asking whether or not I liked champagne. He wanted to buy me a Christmas present. I insisted that he not do this but he in any event sent me a bottle of champagne and a box of Belgian chocolates together with a note thanking me for my assistance up to that date. He also sent Catherine a card congratulating her on the birth of her son. Again I do not consider this the behaviour of somebody who was concerned about the service being provided to him or has been intimidated as to revising costs issues.
In the New Year, on 14 January 2004, I spoke again with Mr Lakhani on the telephone. Tilda had suggested an off the record discussion with him. He wanted to know if he should discuss any settlement they proposed. I suggested that he should because if he could reach an agreement in principle direct with Tilda then this would reduce the legal costs for recording the settlement. Again I reminded him that he needed to take advice from a personal injury specialist in order to assess the likely amount of his personal injury claim if this was to be included in any compromise agreement.
I heard again from Mr Lakhani on 19 January 2004. He wanted further advice about the potential disciplinary action and wanted me to look again at the correspondence. I suggested that I should not be asked to do this as it would only increase the costs but Mr Lakhani was insistent.
We eventually ended our involvement with Mr Lakhani on 15 March 2004 when we sent our papers to Russell Jones Walker. They had been one of the firms I had recommended to provide personal injury advice and, I understood, instructed by Mr Lakhani on or about 2 March 2004."
The attendance notes and letters referred to by FM (other than any there might be relating to the gifts referred to in paragraphs 16 and 22) are among those documents exhibited to her Witness Statement. The factual matters as set out in FM’s Witness Statement were not challenged at the hearing.
Dealing in her Witness Statement with the three heads of "special circumstances" upon which the Claimant relies, FM said (in paragraphs 26.1.1 to 26.1.4) that KL was provided with "Costs Information" in regular written and oral estimates of costs in letters over the telephone and at meetings. He also received regular monthly invoices that kept him abreast of the costs he had incurred and breakdowns of how those costs had been incurred. She said that KL was, considering the uncertainty of how he wished to proceed, provided regularity with costs information and details of further costs.
Mr Little (who appeared on behalf of Eversheds) referred to FM’s Witness Statement and to the documents exhibited to it.
On the subject of "Costs Estimates" he referred to the attendance note of the meeting on 27 September 2002 and to the "client care" letter of 30 September 2002. There was no dispute about the matters recorded there and KL did not contend that the Code had been breached in any way.
Mr Little referred to the attendance note of the meeting on 26 March 2003 which had been held to review the compromise agreement proposed by Tilda. Estimates of the costs which might be incurred if proceedings before the Employment Tribunal and proceedings for personal injury were to be instituted had been given. The estimates were "in the region of £20,000" and "in the region of £20 – 30,000" respectively.
He referred to the e-mail sent by KL to FM on 15 May 2003 in which he had (in paragraph 8) given a figure of £10,903 as a contribution towards his legal costs. He said that that figure was "in the right ballpark" for the legal fees to that date and showed that KL was aware of the costs being incurred.
He referred to FM’s letter to KL dated 23 July 2003. In paragraph 10.1.2, she had given an estimate of the likely cost of Employment Tribunal proceedings. She estimated "at least £25,000 plus VAT".
Mr Little referred to the attendance note of the telephone conversation between FM and KL on 13 August 2003. In that conversation FM had (as already noted) informed KL that Eversheds fees were "currently in the region of £20,000 and expected to reach at least £25,000 even if a settlement is agreed now".
He referred to the attendance note of the meeting between FM and KL on 26 September 2003 where further discussion about the likely costs took place. He also referred to the letter FM had written to KL on 30 September 2003. As already mentioned, further costs information was provided in that letter in which she said that she would expect Eversheds’ future costs to be no more than £5,000 plus VAT and disbursements. The disbursements would, she explained, include counsel’s fees of which she gave details.
Mr Little referred also to the attendance note of the meeting between KL and FM on 14 January 2004. In paragraph 7 of that note it is recorded that FM estimated that the likely fees in respect of unfair dismissal and disability discrimination proceedings only would be "a minimum of £20,000 plus VAT and probably more. The court proceedings could be equivalent or higher".
Dealing next with "cost benefit advice", FM said (in paragraphs 26.2.1 to 26.2.3) that Eversheds frequently advised KL about the costs that were being incurred and the fact that the approach he was adopting meant that Eversheds were unnecessarily incurring costs. She said that they "also repeatedly advised him that the level of settlement he was seeking (in excess of £269,000) was unrealistic."
She said that Eversheds frequently advised KL on the pros and cons of different courses open to him and discussed with him the merits of his claims and the cost of pursuing them. Further she said that Eversheds did obtain value for KL by, among other things, delaying his redundancy period by six months (protecting salary and benefits of approximately £36,000 for the period) assisting him with the redundancy consultation process, investigation and disciplinary proceedings (protecting his unfair dismissal claim, disability discrimination claims and relieving the stress he was under) and obtaining counsel’s opinion on the prospect of success of his personal injury claim.
Mr Little referred to the attendance note of the meeting between CP and KL on 28 January 2003. In paragraphs 35, 38 and 39 it was recorded as follows:
KL asked how long the litigation would take. CP said that if they dismissed him, his unfair dismissal claim would take about 6 months to be heard. His personal injury claim would take much longer.
In the High Court it was possible to get costs back if successful in the region of about 80%. However KL would be at risk for costs of a similar degree if he were to lose. CP then explained Part 36 offers to KL. CP said that most of the costs incurred would be in relation to the hearing itself which puts a lot of pressure on parties to settle. She said that a two to three day hearing would cost in the region of £40 – 50,000. She said that she would need to make sure that KL had realistic prospects and that the amount he would recover would make it worth his while. She said that the personal injury claim costs would be high and she would like to get counsel’s opinion before proceeding with this. She said it was possible to recover some personal injury costs in the Employment Tribunal.
KL said that CP had been mentioning a figure in the region of £200,000. He asked whether this was a figure that CP expected him to receive. CP said that if KL recovered £200,000 it would be a reasonable settlement as it would be equivalent to three years’ salary. However this was based on the assumption that KL could walk into another job which was not necessarily the case. KL added that even if he did get a new job it may not be on the same salary. CP said that she would like to obtain specific advice from recruitment consultants about this. KL said he would be very unhappy with £200,000. CP said that KL needed to put it in context as he had skills which were transferable than, for example, a teacher."
Mr Little submitted that this demonstrated that from the outset, when the instructions became wider following the initial advice given in September, a costs benefit analysis was provided.
Mr Little then referred to the attendance note of the meeting between CP and KL on 26 March 2003. In that attendance note it is recorded that costs benefit advice was given.
The attendance note records that CP advised that pursuing a claim against Tilda would be even more stressful than anything KL had experienced so far. She said that all litigation is speculative, lengthy and expensive. She said that KL "would need to weigh the offer from Tilda against the emotional cost of the alternative which was litigation". The advantage of accepting Tilda’s offer would be that KL would get closure – she advised that KL should think about whether closure would improve his life and his mental health.
Later in the same attendance note it is recorded that KL’s brother asked about the possibility of making a claim for disability discrimination. CP had advised that the benefit of bringing a disability discrimination claim in a Tribunal is that the damages would be unlimited and there would be no risk as to costs. However there would be significant legal costs, in the region of £20,000, which would not be recoverable. These would have to be taken from any amount received by KL in the Tribunal.
Mr Little then referred to the attendance note of the meeting between FM and CP and KL and his brother on 12 May 2003. This records (under the heading "offer") that CP advised that the offer on the table at that moment was not the best offer and that they should now respond with a counter proposal which was credible. She advised that it was a waste of KL’s costs to keep negotiating in stages.
He then referred to the attendance note of the meeting between FM and KL on 4 July 2003. The note records that FM discussed the pros and cons of rejecting settlement in favour of pursuing Tribunal proceedings. She suggested that KL should consider carefully before rejecting settlement on the basis that it would be costly, time consuming and emotionally difficult for him to pursue unfair dismissal/discrimination and personal injury claims. She encouraged him to adopt a realistic and reasonable approach.
Mr Little then referred to the attendance note of the telephone conversation between FM and KL on 10 July 2003. This records that she advised KL that if no settlement was achieved there was a large risk and cost element involved in pursuing tribunal proceedings and that he should always consider the original settlement offer carefully.
He then referred to the letter written by CP to KL on 23 July 2003. In paragraph 8 of that letter CP advised that having regard to the factors she listed (including the inevitable risk that his claims may be unsuccessful) the initial offer was not far away from the level of compensation he could expect to receive at the Employment Tribunal.
Mr Little then referred to the attendance note of the telephone conversation which FM had with KL on 11 August 2003. It records that FM briefly discussed the advantages and disadvantages of commencing a personal injury claim in the High Court as opposed to running this through the Tribunal. She suggested, in particular, that the High Court would be more used to dealing with evidentiary matters for personal injury claims.
He went on to refer to the meeting which KL had with FM on 26 September 2003. The attendance note records that she expressed concern that KL had already incurred significant legal fees and that they seemed to have reached a stage where Tilda were not prepared to negotiate settlement. She was happy to make a final attempt at settlement if KL so instructed, but she was keen to keep costs to the absolute minimum. Her view was that KL might need to commence litigation in order to put sufficient pressure on Tilda to encourage them back to the negotiating table. She reminded KL of her earlier advice that a pure personal injury claim would need to be dealt with by a specialist lawyer outside Eversheds.
Finally Mr Little referred to the attendance note of the telephone conversation between FM and KL on 4 December 2003. It records that she advised KL that it would be quicker (and therefore cheaper) for her to have telephone conversations rather than writing.
Mr Little submitted that it was evident from all this that KL was constantly kept informed of costs issues but did not really help himself by not taking the advice he was given.
On the third issue of "Duplication" FM said in paragraph 27.1 of her Witness Statement that she did not duplicate CP’s work. Where she worked on a particular point with CP she conducted the initial work that had in any event to be carried out for her to complete the particular task. This was cost efficient as work was done at her level and rate as opposed to CP’s. Also any true duplication of time was written off the file as was appropriate because they always considered carefully what should be billed to KL. She also pointed out that KL sometimes contacted both CP and herself on the same issue which meant that they had to liaise to ensure they were clear as to what was happening and what he wanted.
Mr Little said that, in his submissions about alleged duplication, Mr Neil had referred to instances in the breakdowns of the bills dated 23 June 2003, 11 July 2003, 29 August 2003 and 30 September 2003. These were just four out of the ten bills which KL sought to be assessed. In some of the instances to which Mr Neil referred no charge had been made for the time of the other fee earner.
Mr Little referred to the "client care" letter of 30 September 2002 where FM said:
"I will have the day to day conduct of this matter and be your prime point of contact. Catherine Prest will be the client contact partner as described in the Terms of Engagement and will be responsible for overall supervision."
He said that KL nevertheless contacted CP and dealt directly with her in January 2003. This was changing the lines of communication at his own volition. He referred to the five instances of alleged duplication in the breakdown to the bill dated 23 June 2003. CP and FM had both become involved because KL wished it and since they were each holding discussions with different people they had to confer with each other.
Mr Little referred to paragraph 3 of FM’s Witness Statement where she said that she and CP were particularly conscious of the need to maintain control over costs because KL was ill and facing the prospect of losing his job.
Mr Little said that in the breakdown to the bill dated 11 July 2003 there were only five items of alleged duplication which could be explained for the same reasons as those in the bill dated 23 June 2003.
He said that in the breakdown to the bill dated 29 August 2003 there were only six items of alleged duplication. In two of these time was claimed for FM but no corresponding time was claimed for CP.
Mr Little said that only four items of alleged duplication appeared in the breakdown of the bill dated 30 September 2004. Of those, one claimed time for FM but no corresponding time was claimed for CP.
He submitted that it was evident that KL was able to put forward very little to substantiate a case of duplication and that any duplication there was had been brought about by KL himself.
Mr Neil said that the costs information which had been given to the Claimant related to the likely costs of proceedings in the Employment Tribunal and proceedings for personal injuries. For the most part it did not relate to the costs of the ongoing negotiations which was the task being undertaken by Eversheds.
He referred to paragraph 1(b) of the Code which states:
"The main object of the Code is to make sure that clients are given the information they need to understand what is happening generally and in particular on:
the cost of legal services both at the outset and as the matter progresses; and
responsibility for clients’ matters."
Mr Neil also referred to paragraph 3(c) of the Code which states:
"The information required by paragraphs 4 and 5 of the Code should be given to a client at the outset of and at appropriate stages throughout the matter. All information given orally should be confirmed in writing to the client as soon as possible."
Mr Neil referred to paragraph 4 of the Code which states:
The solicitor should give the client the best information possible about the likely overall costs, including a breakdown between fees, VAT and disbursements.
The solicitor should explain clearly to the client the time likely to be spent in dealing with a matter, if time spent is a factor in the calculation of fees.
Giving "the best information possible" includes:
…..
explaining to the client the reasons why it is not possible to fix or give a realistic estimate or forecast of, the overall costs, and giving instead the best information possible about the costs of the next stage of the matter."
Mr Neil said that those provisions of the Code had been complied with in September 2002, but had not been complied with after that.
He said that the costs estimates given on 28 January 2003 and 26 March 2003 related to Employment Tribunal and personal injury claims whereas they should have related to the costs of the negotiations.
Mr Neil referred to the attendance note of the telephone conversation between FM and KL on 13 August 2003. He said that the fact that KL was aware of the level of the costs did not mean that he was not entitled to have received advance information as to future costs. He was only being given information about costs which had already been incurred.
He referred to the attendance note of the meeting on 14 January 2004. He said that again the estimate of future costs related to unfair dismissal and disability discrimination proceedings and not to the cost of negotiations.
Mr Neil referred to paragraph 4(k) of the Code. He submitted that until KL knew what the costs of the negotiations would amount to, he could not make a costs benefit analysis.
Referring to the attendance note of the meeting between KL and CP on 26 March 2003, he submitted that KL had not been given cost benefit advice because no details of financial costs had been provided.
Similarly referring to the attendance note of the meeting on 12 May 2003, Mr Neil submitted that no cost benefit advice had been given. KL had merely been advised that it was not cost effective to negotiate in stages. KL should have been informed of the difference in cost between the method of negotiation Eversheds recommended and the method KL proposed.
Mr Neil referred to the attendance note of the meeting between FM and KL on 4 July 2003. He submitted that KL should have been told what the cost of holding out for a better settlement would be.
He then referred to the attendance note of the telephone conversation between FM and KL on 10 July 2003. He submitted that Eversheds should have given KL advice about the costs which would be incurred (a) if a settlement offer was accepted, and (b) if it was rejected.
Referring to the attendance note of the telephone conversation on 11 August 2003 between FM and KL, Mr Neil said that the choice between commencing a personal injury claim in the High Court rather than through the Employment Tribunal was not relevant to the cost of the negotiations or to cost benefit advice.
Mr Neil referred to the attendance note of the meeting between FM and KL on 26 September 2003. He submitted that her concern at the significant legal fees KL had already incurred did not assist him. It dealt with the problems of costs already incurred.
Finally (on the subject of costs estimates and cost benefit advice) Mr Neil referred to the attendance note of the telephone conversation between FM and KL on 4 December 2003. The advice that it would be quicker (and therefore cheaper) for her to communicate on the telephone rather than in writing came very late in the day.
With regard to the issue of duplication, Mr Neil said that it was correct that he could not put this point at its highest because the only information he had was from the bills and the breakdowns. However he submitted that nevertheless the level of duplication which he had highlighted gave cause for concern.
I accept the factual evidence given by FM in her Witness Statement which has not, in any case, been challenged. The issues between the Claimant and the Defendants are about the interpretation of that evidence. Was there a failure by the Defendants to give the Claimant proper costs information and cost benefit advice in accordance with the Code and if so does that amount to special circumstances such as would justify the court in ordering a detailed assessment? Was there duplication between fee earners of sufficient seriousness to justify the court in finding special circumstances so special as to warrant an order for detailed assessment?
In my judgment the evidence of FM in her Witness Statement and the letters and attendance notes exhibited to it demonstrates clearly that KL was given the information he needed to understand what was happening generally and in particular on the cost of the legal services both at the outset and as the matter progressed as is required by paragraph 1(b) of the Code.
My reasons for coming to this conclusion are that KL was well aware of the costs he was incurring after he contacted CP in January 2003. He was given bills on a monthly basis in compliance with paragraph 6 of the Code. He was given frequent advice about the likely cost of adopting different courses of action. He was informed of the hourly charging rates of FM and CP at the outset of the matter.
It is therefore clear to me that when he received advice and made up his mind whether or not to accept it and gave instructions to Eversheds, he understood fully what was happening and he understood what the legal services were costing and, assisted by the advice he was given, he understood what they were likely to cost in the future.
KL held a senior and responsible position. Paragraph 3(b) of the Code provides that any costs information required to be given by the Code must be given clearly, in a way and at a level which is appropriate to the particular client. I have no reason to doubt that the advice given to KL was given in a way and at a level appropriate to him.
The only criticism I have is that the costs estimates and cost benefit advice given to the Claimant were so rarely given in writing. Paragraph 1(d) of the Code provides that it is good practice to record in writing all information required to be given by the Code and paragraph 3(c) provides that all information given orally should be confirmed in writing to the client as soon as possible. However it is clear that KL was well aware of the mounting costs (see his comments of 15 May 2003 about costs which show that this was so). I do not consider that failure to confirm all advice in writing amounts (in this case) to a breach of the Code.
With regard to cost benefit advice, I do not accept Mr Neil’s submission that the advice given was inadequate. Paragraph 4(k) of the Code does not require the solicitor to give the client advice which weighs simply the financial cost of different courses of action. The other risks related to proposed courses of action (such as risks to the client’s health) are just as relevant.
Accordingly in the circumstances of this case and having considered all the evidence I am satisfied that there has been no breach of the Code.
Dealing with the submission that duplication between fee earners gives such cause for concern as justifies the court in finding special circumstances and to order a detailed assessment, I am not satisfied that KL has made out a case on this issue. He has been able to point to only four out of the ten bills where there is evidence of duplication. However I am satisfied that this can to a large extent be explained by the fact that KL (knowing from the client care letter that FM was intended to have day to day conduct of the matter) instructed CP direct. He must have understood that this would lead to additional expense. I do not accept Mr Neil’s submission that Eversheds should have warned him of the costs consequences of his actions in this respect. He was clearly an intelligent client holding a responsible position in a large company who had been provided with full information about who was responsible for his work and the charging rates of the individuals concerned.
It follows that this Part 8 claim must be dismissed. If the parties do not attend when this judgment is handed down I will give directions for a later hearing. Otherwise I will hear submissions as to the terms of the Order including costs and any application for permission to appeal when the judgment is handed down.