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Insight into the Court's views on the recoverability of inter fee earner discussions

View profile for Kate Newberry
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It is widely accepted that receiving parties struggle to recover the costs of inter fee earner discussions and supervision on assessment. Historically such work has always been the subject of dispute by paying parties and disallowed on assessment, even if the work has ultimately resulted in a saving on costs

The cases often relied upon by paying parties are R v Sandu [1984] Costs LR (Core) 451 and Re Radcliffe [2004] EWHC 90039 (Costs).  In R v Sandu, it was commented that “It is always, or almost always, inappropriate for a claim to be made for a letter sent by one fee earner to another in the same firm. The allocation of tasks between them is part of the irrecoverable overhead of the firm".  Similarly in Re Radcliffe, Master O’Hare followed the principle outlined in Sandu and in addition commented that inter fee earner discussions should only be allowed in a situation whereby, “an unexpected turn of event where the senior solicitor's extra experience and weight would be an essential reinforcement".

These decisions and the general principles behind the need for inter fee earner discussions make such costs difficult to recover, however, a recent decision in the case of TUI UK Ltd v Tickell & Others [2016] EWHC 2741 (QB) has been welcomed by receiving parties as it seems to provide a glimmer of hope in recovering such costs, provided the facts of the case warrant it.

TUI UK Ltd v Tickell & Others [2016] EWHC 2741 (QB)

Background

This case was an appeal of a decision of Master Howarth at detailed assessment in December 2015.  Leave to appeal was initially refused but subsequently granted upon provision of amended grounds of appeal.  The case was a group travel litigation claim brought by 205 Claimants for being taken ill abroad and holidays which were not of the quality expected. The case was led by eight lead Claimants with a view to saving costs.  The Defendant failed to respond to the pre-action protocol letter, thereafter denied liability throughout and failed to respond to the Claimant’s invitation to engage in ADR; the Defendant alleged the correspondence and invitation letters were defective, but nevertheless still failed to respond,  The claims settled shortly prior to trial in February 2014; most Claimants (172) received damages below £1,500, on average £700, with the rest (32) receiving damages, for more serious illnesses, above £1,500.  The Claimants served one generic bill and 205 individual bills.  Total costs claimed were £1,768,011.25.  The court dealt with preliminary issues in January 2015 at which the Master deemed the costs were disproportionate.  The hearing continued in December 2015, with the parties having agreed the Master should consider just 24 files due to the high volume of cases, resulting in a selection of claims being chosen from the three different groups; those which were called ‘quality only’ claims; those who had suffered from upset stomachs; and those who suffered more serious illness. This was agreed by both parties as a sensible and proportionate alternative to the assessment of 205 individual bills.  The Master allowed costs of £999,121.36 made up of £365,580 in respect of the generic bill and £630,456 in respect of the individual bills.

Grounds of Appeal of Inter Fee Earner Discussions

The court noted that the Defendant’s general ground for appeal was that pursuant to the recommended approach in Lownds the Master, whilst initially finding costs were disproportionate, had not applied the necessity test with sufficient rigour because he was required to disallow unnecessary costs and had failed to do so.  Amongst other grounds (which will not be addressed here), the Defendant’s Ground 1 contended that the Master was wrong to allow 144 hours of inter fee earner discussions on the individual bills because the agreed amount did not relate to any individual case, time had already been allowed in the generic bill, the discussions were unnecessary and probably didn't occur and also the attendance notes of such discussions were not individually considered by the Master. 

Decision

On Appeal, Mrs Justice Elisabeth Laing DBE agreed with the Master’s approach on how the inter fee earner discussions had been allowed. She noted that the Claimant had submitted that most of the work on the files had been done by paralegals, and that qualified solicitors and partners had only been involved sporadically. The Claimant submitted that it would be unfair to impose significant reductions for ‘something which was necessary to have this case run in the way in which it was run and to have the work done at the levels of fee earners that it has been done’. She agreed that as most of the work was carried out by paralegals it was necessary to allow time for some discussion between fee earners. She also noted that whilst the Master had allowed 144 hours of time for inter fee earner discussions on the individual bills, in fact, it worked out that on average just 40 minutes had been claimed per Claimant per year for such discussions. Mrs Justice Elisabeth Laing DBE also noted that the Master had commented that the cases were well run and well-documented and was content in allowing the 144 hours, whilst considering the position that costs were disproportionate.

Ultimately, Mrs Justice Elizabeth Laing DBE was satisfied with the Master’s decision and agreed that 'it was necessary from time to time, to have discussions between fee earners, specifically supervising solicitors, including partners.” She also noted that in reaching his decision the Master had referred twice, correctly, to the proportionality test he had to apply, having previously deemed the costs to be disproportionate.  In regard to the fact the Master had not viewed the attendance notes, Mrs Justice Elizabeth Laing DBE stated that firstly they were not in issue in the points of dispute as the Defendant had simply resisted the head in principle, however it was clear that the parties had sensibly agreed that the Claimants did not need to go to the expense of producing the attendance notes and taking the Master through them individually.  Both parties had agreed that a ‘broad-brush’ approach would be the most prudent and proportionate way to handle the assessment of the voluminous bills.  In addition, the Defendant was aware that the approach created a risk of distortion but continued to agree the approach. The ground of appeal was duly dismissed.

Discussion

Despite this favourable decision to receiving parties it is unlikely that this allowance of inter fee earner discussions will be applied in all cases from here out.  Realistically this case was unusual in the number of Claimants and the fact it had primarily been conducted by paralegals.  Accordingly it is more likely that this decision will be of relevance when lower grade fee earners have played an integral part of a case, subject to the work being reasonably justified. Whilst this case will be welcomed by Claimant practitioners, it would be unwise to think that this approach can and will be applied to all disputes relating to inter fee earner discussions. It begs the question whether the outcome would have been different if the Master had only 1 bill to assess and not 205, based on our experience the answer is likely yes.  

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