Addleshaws H1 figures down as 'no-win no-fee' strategy takes its toll
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Addleshaw Goddard has seen revenues drop for the first six months of 2010, with the firm attributing the dip in part to its decision to pursue cases on a “no win no fee” basis.
Paul Devitt
Addleshaw Goddard has seen revenues drop for the first six months of 2010, with the firm attributing the dip in part to its decision to pursue cases on a “no win no fee” basis, meaning that a percentage of income from current litigation has been deferred until the outcome of each case.
The national firm brought in £78.1m to the end of October, four per cent down on the comparable period in 2009. Last month The Lawyer revealed that the national firm had agreed a conditional fee arrangement (CFA) deal with Russian oligarch Boris Berezovsky meaning that it shares the risk with the client (8 November 2010).
A statement from the firm indicated that the decision to run a number of cases under conditional fee arrangements “has meant that income from those cases in the first half of this year was lower than it would otherwise have been” and that discounting this factor like-for-like income would have been flat.
Addleshaws has also saw its head of litigation Simon Twigden, believed to be one of the contentious practice’s biggest billers, quit at the beginning of the financial year to form his own boutique (23 April 2010).
Managing partner Paul Devitt said: “The start of this financial year was more challenging than we had anticipated after a strong finish to the second half of last year. And whilst market and economic conditions remain uncertain, recent progress gives us confidence for the second half of this year and beyond. We have seen significant developments in key client relationships, good recent wins and our pipeline is encouraging.”
The CFA deal agreed with Berezovsky means that if Addleshaws wins his $4bn (£2.5bn) claim against Roman Abramovich it will be in line to be awarded a success fee running into tens of millions of pounds. It is believed the firm has taken out legal expenses insurance to cover the risk of losing, in which case its fees would be left unpaid.
Readers' comments (9)
Anonymous | 10-Dec-2010 12:25 pm
Didn't they also act on the world's 'worst tennis player' case? Addleshaws might have been successful in forcing the BBC to hand over £28,000 of tax payers money to the tennis player for libel, but the telegraph was less willing to cough up. That case, done on CFA, cost the firm £500,000 in fees
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Perry Groves | 10-Dec-2010 12:30 pm
If the firm says like for like figures are flat, doesn't that mean the CFA gamble hasn't paid off? Or am I missing something?
It sounds like they are gambling with partners money by doing this. Just got to hope Berezovsky wins now...
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Anonymous | 10-Dec-2010 1:04 pm
@Perry - presumably, they're still at the stage where a high percentage of the CFA cases remain ongoing and therefore haven't earned them anything, whereas they'd have been interim billing privately paying clients, so let's see what the figures are once they start settling/winning the CFA cases and recovering costs on them (or possibly losing them.....)
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Anonymous | 10-Dec-2010 1:30 pm
This demonstrates how 'no win no fee' simply doesn't transfer to bigger, less frequent deals: it works with high street solicitors because they have a massive turnover of cases and charging loads for the successful ones pays off for the failed cases.
It's concerning for Addleshaws because so much ends up riding on one case - and the amount of of money we're talking is immensely demoralising to lose.
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Anonymous | 10-Dec-2010 2:46 pm
Have I missed something?
Doesn't it state that the firm has taken out insurance to mitigate the risk of losing!
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Anonymous | 10-Dec-2010 3:28 pm
It wasn’t so long ago that AG was one of the blue-eyed boys of the legal sector, boasting an aggressive management with big ideas and keen to tell everyone about it. They even got some of their whizzy management practices written up as a Harvard Business School case study, such was the innovative nature of what they claimed they were doing. But just like others before them – Halliwells, Eversheds, Olswang, Osborne Clarke – they are not that special, in fact rather ordinary firms which just got carried away a bit with their own self-importance!
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Anonymous | 10-Dec-2010 4:07 pm
@2:46pm. Yes, you have missed something. The insurance will pay the other side's legal costs if AG's client's case fails. It will not pay AG's costs.
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Anonymous | 13-Dec-2010 9:59 am
I suspect you will find this is "no win, reduced fee" rather than "no win no fee".
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Anonymous | 14-Dec-2010 5:06 pm
The insurance covers AG's fees. The difference is that if the case was lost there would be no uplift.
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