Costs News

05 December 2019
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Law firm sees fees claim slashed after failing to provide estimate

A law firm that failed to give its client an estimate has been limited to the costs he expected to pay – around a third of what it billed.

The defendant alternative business structure in Dunbar v Virgo Consultancy Services Ltd [2019] EWHC B12 (Costs) assisted with the preparation of the defence of the claimant Eric Dunbar's son, who had been arrested in Crete and charged with serious criminal offences. He was acquitted of all charges.

Mr Dunbar had instructed Greek lawyers at a fixed fee of €30,000 and agreed to pay Virgo – based in Barry, Wales and London – an initial £10,000 as a deposit against costs and disbursements. Master Leonard in the Senior Courts Costs Office said this sum was paid “on the understanding that it would be sufficient to secure the services of the defendant to play a secondary, supporting role in the UK”.

A key event during the case was that Virgo managing director Hilary Brown took a unilateral decision to dismiss the Greek lawyers.

Master Leonard was asked to assess Virgo’s bill of £84,000 (including VAT), although the accompanying breakdown indicated that work worth £96,000 was actually undertaken.

In a first preliminary hearing, the master found there was a retainer but that its terms were never clearly defined and that no fees were specified or agreed. The second preliminary hearing – dating back to February but only just published – was whether the amount that it was reasonable for the claimant to pay should be limited to a particular sum.

Having considered the authorities put before him, Master Leonard distilled various relevant principles: “If, on the assessment of costs between a solicitor and a client, it is found (a) that the solicitor has never provided the client with an estimate of the costs that the client was likely to pay and (b) that if a proper estimate had been given, the client would have paid less than the solicitor is claiming, it may be appropriate to limit the amount payable by the client to the solicitor to an amount that it is reasonable, in all the circumstances, to expect the client to pay. That may be less than would otherwise be payable for work reasonably done by the solicitor at a reasonable rate.

“In order to demonstrate that it is right to limit the solicitor's recoverable costs in that way, it is not necessary for the client to prove on the balance of probabilities that he or she would, if adequately advised, have acted in a different way which would have turned out more advantageous to him or her.

“It may be sufficient that the failure to provide adequate advice deprived the client of an opportunity of acting differently, though that is likely to carry less weight, particularly where it is not possible to do more than speculate as to the way in which the client might have acted, if properly advised.

“The ultimate aim will always be to identify the sum that, in all the circumstances, it is reasonable for the client to pay.”

Master Leonard rejected the defendant's attempted justifications for failing to give any estimate of costs and said Ms Brown's actions “completely undermined the claimant's financial planning”. He explained: “Had she not sacked the original Greek legal team without the claimant's knowledge or consent, they could, and probably would, have continued to represent Mr Litchmore-Dunbar through to trial, with the defendant playing the supporting role that the claimant had asked for. Costs could have been managed accordingly.”

The judge continued that the claimant could have replaced them with another Greek legal team at, on the evidence, comparable cost, “rather than having the defendant replace them at over three times the cost plus the new advocate's fees”.

He said: “At no time during the currency of the defendant's retainer with the claimant was he aware of any obligation to pay, for Mr Litchmore-Dunbar's defence, more than the combination of the €30,000 he had agreed to pay to the original Greek legal team and the additional £10,000 he had agreed to pay the defendant. He did not authorise, expressly or implicitly, any expenditure above that level and the defendant did not give him the opportunity to do so.

“It seems to me that the proper conclusion to draw is that any costs claimed by the defendant which would oblige the claimant to pay more than that total amount have been unreasonably incurred.”

This meant Mr Dunbar’s liability was £34,000 – having converted the euros to sterling – from which the judge deducted the £10,000 already paid and €20,000 paid to a second Greek advocate. This left £8,000 due to Virgo.

Simon Edwards (instructed by White Dalton Motorcycle Solicitors) for the claimant and Simao Paxi-Cato (instructed by Virgo Consultancy Services) for the defendant.

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