A&O slammed for "shocking" costs
Allen & Overy (A&O) has been slammed by the High Court for racking up almost £5.2m in costs and spending the equivalent of nine man years for a five-day trial.
Mr Justice Floyd, in handing down his cost judgment yesterday (17 April), on patent infringement case Research In Motion UK (RIM) v Visto, held there was "quite a staggering disparity" between the cost estimates of the two parties.
Visto's lead partner Gary Moss from Taylor Wessing estimated that his firm's costs would be £1m compared to £5.18m for A&O acting for RIM.
Floyd J said he had been given a breakdown of costs, which "reveals some really shocking statistics".
Over the 15 months between the claim form being issued and the trial, the magic circle firm had one partner, Nicola Dagg, three senior associates and three associates as well as an unspecified number of trainees and paralegals working on the case.
One of the senior associates spent 2,252 hours working on the case while another spent 2,291 hours. For these two associates alone the charges amounted to nearly £2m.
Floyd held: "For these sums of money one would be entitled to expect each of them to be able to recite all the documents in the case by heart."
The judgment continues that Dagg spent 1,387 hours on the case, while the remaining associates spent 3,500 hours or so between them.
In relation to other legal costs, Floyd ruled: "Perhaps most surprising of all is that another £1m odd has gone on trainees and paralegals. They have spent over 5,000 hours on the case."
Dagg defended the high costs for paralegals and trainees by stating that her instructions were to leave no reasonable stone unturned, but Floyd J felt that the research was unnecessary and "surprising".
Floyd J ruled: "If one adds up all the hours spent by RIM's solicitors, one finds that some nine man years have been spent over 15 months. All for a trial with no disclosure which lasted about five days."
The cost order came about following Visto and RIM disputing three patent infringements. RIM was the overall winner in relation to one while on the other two RIM consented to their revocation before trial.
The High Court's final order was for a cost judge to go through RIM's costs item by item so Visto could pay 66 per cent costs on all three patents. RIM was ordered to pay 51 per cent of Visto's total assessed costs on all three patents.
A spokesman for A&O said: ""The reality is that the legal costs were a tiny fraction of the value of RIM’s business, which was put at risk through this litigation. A&O's efforts also benefited RIM and the industry by removing Visto’s ability to pursue disproportionate financial gain from the patent."
Dagg instructed Antony Watson QC as lead counsel with Thomas Hinchliffe, both of Three New Square for RIM.
Moss instructed lead counsel Henry Carr QC of 11 South Square, assisted by Henry Ward of 8 New Square.
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Readers' comments (21)
Anonymous | 18-Apr-2008 11:45 am
Costs
The 5-day trial length makes it quite clear that there were not terribly many issues in dispute in the proceedings. In that case, Allen & Overy's costs are so disproportionate to the issues being litigated that those involved should be ashamed of their management of the matter.
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Anonymous | 18-Apr-2008 2:14 pm
Costs
A&O's use of the term "tiny fraction" in its spokesman's response, merely underlines the firm's inability to grasp the concept of proportionality.
A&O should have spent some of the immense man hours it clocked-up considering their client's business rather than its own. I personally can't imagine any legal issue requiring that amount of research, the average adult could comprehend (from a cold start) the time-space continuum in far far less time.
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Anonymous | 18-Apr-2008 3:05 pm
Costs
Maybe Taylor Wessings' client had no confidence in the case? That could explain the 5 to 1 difference!
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Anonymous | 18-Apr-2008 3:23 pm
Mr Justice Floyd
Those are some fairly strong expressions by Mr Justice Floyd. Christopher Floyd is not someone who is given to extreme statements, he is normally quite conservative and not strongly extrovert in the way he expresses himself.
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Anonymous | 18-Apr-2008 3:34 pm
costs
Trainees and paralegals do what they're told. Like the sorcerer's apprentice, they'll carry on doing it until they're told to stop. If the hours are high it's because of the lack of management.
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Anonymous | 18-Apr-2008 3:43 pm
"Big Company in Big Cases Cost Big Money Shocker"
Does anyone sense that the Anonymous posters might be from rival law firms? They purport to know a lot about this case considering that they weren't involved. Given that RIM won the case, one can only assume that they were very happy with the efforts of A&O's poor, overworked associates (one's heart bleeds). RIM can hardly have failed to notice that they were paying a goodly amount for A&O's services, but then they are a big company and presumably wanted to win. So where exactly is the news?
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Anonymous | 18-Apr-2008 4:48 pm
Aren't we all missing the point a bit?
If we're going to re-write the headline, surely those downtrodden associates at A&O should be hailed as heroes for saving the legal profession's favourite business efficiency tool?! Or have the ex-lawyers at the Lawyer been released from their email shackles? ...Sent from my BlackBerry Wireless Handheld...
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Anonymous | 18-Apr-2008 4:49 pm
Big money, big case
Well, it's pretty obvious the judge wasn't too impressed with A&O, whatever RIM might think...
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Anonymous | 18-Apr-2008 5:03 pm
A&O COSTS
Interestingly, if one takes the two associates referred to - their hours total around 4500, which equates to £444.44/hour as the associate rate. If one assumes that say 1500 hours p.a. were recorded this implies a billing total for each associate of £666,666 . OK so I only got this by rounding the hours down to 4500.......Is there a dark force at play here, or maybe this is where the 66% figure came from?
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Anonymous | 18-Apr-2008 5:19 pm
Costs
Entertaining reading, for sure, but you can't ignore the fact that, though Taylor Wessing racked up a fifth of A&O's costs, they lost the case. You don't win major commercial litigation by counting the pennies.
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Anonymous | 18-Apr-2008 6:04 pm
Tough press for A&O
The judge may not have been impressed, but it looks to an extent like A&O have taken one on the chin for their client here. Judges frequently criticise solicitors for the level of their costs, and Messrs Allen & Overy could easily have downplayed the size of their bills to avoid this (one suspects firms do this all the time - who knows, maybe they did here). But if/when firms do this they: (a) give judges an artificial impression of what big cases really cost to run; and (b) remove any chance their clients have of recovering those costs. Don't ask, don't get. Do ask, risk stern telling off, but then that's your job.
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Anonymous | 18-Apr-2008 6:05 pm
A&O slammed for "shocking" costs
As a mere claimants' personal injury lawyer trying against the odds to make a crust (always an honest one) I shall produce this story, and the judgement when I can get hold of it, to the district judge and to the paying party's moaning representative at my next detailed assessment hearing.
The word proportionality (or lack of it) comes to mind.
And they probably only paid a few thousand pounds in total court fees over the length of the case to occupy the trial court for 5 days and for their costs hearing - at what expense to the Court Service?
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Anonymous | 18-Apr-2008 7:45 pm
Costs judge
What's passing people by here is that this still has to go off to a costs judge. It doesn't necessarily follow that A&O will be putting all this forward as costs. It'll be interesting to see how much A&O will recover when they go before the costs judge.
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Anonymous | 18-Apr-2008 8:13 pm
Counsel
I see counsel are a bunch of Squares...
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Anonymous | 19-Apr-2008 5:02 am
Shame on A&O
I'm really disgusted by the statement of A&O's spokeman. A&O lawyers are simply inefficient. Their despicable spokeman might try to frame the issues and twist the facts very nicely, but that won't change the fact that A&O lawyers are extremely inefficient compared to their rivals.
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Anonymous | 19-Apr-2008 9:37 am
Big litigation, big fees.
Floyd J is out of touch if he thinks A&O's costs are unrealistic. Lawyers are paid by the hour and after 15 months of pre-trial work, the fees are unsurprisingly large. RIM/Blackberry and Visto are large wealthy companies and can afford this type of litigation. The London decision was an important milestone for RIM in light of pending US litigation. As a rich client, I would rather pay £5 million and win, than £1 million and lose. As for expensive lawyers, the market will generally sort itself out in the lomg term...
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Anonymous | 19-Apr-2008 10:32 am
Outsource to INDIA
Save costs and outsource to India the research aspects, people there can do it at a fraction of cost, less attitude, without unnecessary coffee breaks and other breaks, getting down to business with much fuss. US firms started to do it long back, its time for UK firms to learn lessons. And more importantly, UK legal professionals should learn the lesson that if they don't reduce their cost, and abnormally high standard of living, work is going to go to other countries and it should, because there are capable people who can do the same job with much less cost and attitude.
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Anonymous | 20-Apr-2008 12:42 pm
Costs
Although completely relevant, it isn't just an issue of proportionality (or lack of), there is also a reliance by A&O on proportionality, using the scale of RIM's business in order to rationalise such a high fee over a comparatively short period, for such a short trial, for such a limited number of individuals. In other words, the business is huge, the amount at risk is huge and accordingly we can justify a huge fee (whether genuinely required or not (I have no idea if it was).
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Anonymous | 21-Apr-2008 9:17 am
Value for money?
The implications of the case could have been huge for RIM. "Investing" £5 million in legal fees may have seemed like a good move for the firm, particularly given the potential dent from licencing costs or even losing parts of what makes RIM unique.
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Anonymous | 21-Apr-2008 9:48 am
Deepest Pockets Always Win
Is this just another lesson for all disputes, regardless of jurisdiction, settle if the other side is richer or, is it a simple matter of piling on the hours and get as many people involved at the same time so you can justify the fee you decided to charge? It would be very interesting to hear what A&O's clients have to say if and when they get a bill for this and for how much....
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