Loser’s winning strategy

Addleshaws to stick with CFAs despite Berezovsky questions

Mark Hastings
Mark Hastings

It has been open season on Addleshaw Goddard in the wake of Mrs Justice Gloster’s ruling in Berezovsky v Abramovich, with many questioning the firm’s logic in granting Berezovsky a conditional fee agreement (CFA).

Gloster J slammed the ousted Russian oligarch Berezovsky as a witness when she threw out his claim against the Chelsea FC owner.

“He embroidered and supplemented statements in his witness statements, or directly contradicted them,” she said.

So why then did Addleshaws agree to share the litigation risk and bankroll the case to the High Court? And what next for the case?

According to sources Addleshaws had secured legal expenses insurance for the CFA, meaning any loss should be covered. In addition, Berezovsky is understood to have paid a chunk of his fees.

Just Costs national advocacy manager Tom Blackburn says rather than backfiring on Addleshaws the firm has scored a PR victory.

“They’ve shown they’re willing to take a risk on behalf of a client and not just on the most promising cases,” he says.

That said, there is potential for this to go drastically wrong for Addleshaws. Abramovich could claim some reasonable costs back.

One partner states: “It wouldn’t be unreasonable to go for indemnified costs after a judgment like that.”

If a costs battle is brewing Addleshaws will have to consider its costs schedule. A firm can spend on average three months putting one together in commercial cases, but there are exceptions.

When Herbert Smith fought with Ashurst and legacy DAC Beachcroft firm Davies Arnold Cooper for Total over the Buncefield explosion, for example, its preliminary £12m bill took two and a half years to compile. Supreme Court justice Jonathan Sumption QC, formerly of Brick Court, was instructed by Herbert Smith at a cost of £750,000 for three days in court.

Whether it is ‘reasonable’ to pay so much would have been put under the judicial spotlight had the Buncefield costs battle not settled.

A costs battle could put counsel fees in the limelight again. This would only be compounded further if the ATE insurer refuses to indemnify a claim because of Gloster J’s comments.

For Addleshaws, however, it is business as usual and the firm is keen to repeat what it sees as a Berezovsky success by staying committed to conditional fees.

Katy Dowell