For the past three years Leigh Day & Co senior partner Martyn Day has been fighting oil company Trafigura on behalf of 30,000 claimants based in the Ivory Coast.
For the past three years Leigh Day & Co senior partner Martyn Day has been fighting oil company Trafigura on behalf of 30,000 claimants based in the Ivory Coast. The claim has been one of the most controversial in recent years and ended with a settlement and Trafigura refusing to concede liability.
Costs in a case of this size conducted on a conditional fee arrangement (CFA) basis were always going to be high, particularly given the high calibre of lawyers involved. But the profession was stunned when Leigh Day filed a £105m costs order against its adversary last week (13 May).
Trafigura’s counsel, Sean Wilken QC of 39 Essex Street, told the High Court that the fees were “staggeringly high”, adding: “I’m told that this is one of the largest – if not the largest – costs claims in legal history.”
Yet, according to Day, the fees could escalate further before a final costs order is decided by senior costs judge Chief Master Hurst and Mr Justice MacDuff, who are presiding over the case.
The court was convened to discuss the timetable of the future costs hearings. The hearing gives both sides the opportunity to set out a costs estimate, a proposed success fee level and proposed hourly rate.
Leigh Day’s costs of £105m, which included a proposed 100 per cent success fee, is a top-end estimate and is yet to be agreed by the court. That will be decided in the autumn.
If the figure is disputed a further hearing could be scheduled in 2011 to bring the case to a close once and for all.
While this is being decided both sides will be using up billable hours, which will then be added to the final bill, pushing costs up even further.
Trafigura is understood to have filed a costs bill of £14m – £91m less than Leigh Day’s.
The legal battle has been bedevilled by controversy from the very beginning and last year was the subject of parliamentary debate.
Leigh Day launched the £100m claim on behalf of 30,000 claimants who, it alleged, had suffered varying degrees of illness as a result of toxic waste being dumped around the capital Abidjan.
The dispute was settled in September, with Trafigura agreeing to pay out £30m to the claimants, the equivalent of £1,000 each.
“These cases are a massive risk,” says Day. “You’re talking about claimants who live in a war-torn country and you’re up against a company that turned over $80bn [£54.41bn] last year. They’re fighting for their reputation and the battle is fierce. The risks are extremely high.
“It’s entirely right that we should be compensated for that risk.”
The £105m figure proposed to the court includes a £10m legal expenses insurance premium and £5m in disbursements. Billable hours, which included the fees of two silks and two junior barristers, stood at £45m. With the combined 100 per cent success fee the figure stands at £90m.
According to one claimant lawyer, “it is quite clearly a very substantial bill compared with the settlement, but you do have to consider the risks they took. Trafigura fought this tooth and nail and came to the settlement kicking and screaming.
“Mind you,” continues the lawyer, “a bill of £45m is quite substantial when you compare that with the £30m the claimants received.”
Beachcroft partner Andrew Parker, who advised Lord Justice Jackson on his civil costs review, goes a step further. “Are Leigh Day and their counsel adequately paid for the work they’ve done and the risk they’ve taken on at £45m? My gut reaction is yes,” he says. “So should they be taking another £55m? No.”
Another claimant lawyer suggests, though, that Day would have needed to convince his partnership to support the action and that the promise of a lucrative payday may have sealed the deal.
The source says: “It takes a huge amount of work to put these kinds of cases together; a lot of work goes into it and if you don’t succeed it’s a huge whack of the WIP [work in progress]. Getting everyone to support the claim is a massive challenge – it will always help if there’s money in the pipeline.”
A defendant lawyer, who asked not to be named, rejected this. “Why should [Leigh Day] be able to claim a £45m uplift?” he queries. “They’ll be drinking champagne while the claimants will be wondering where their money is.”
Day insists any money the firm receives from the costs judge will be invested in more cases of a similar ilk.
Furthermore, he says that between 19,000 and 20,000 of the claimants registered had now cashed their cheques, with that figure still rising significantly.
Ultimately it will be down to Leigh Day and its counsel to justify their fees to the courts. Trafigura will be working hard to illustrate that the opposite is true.
- August2006: Oil tanker Probo Koala dumps 400 tonnes of toxic waste in and around Ivory Coast capital Abidjan.
- September 2006: Trafigura commissions scientists to investigate effects of the dumping.
- November 2006: Leigh Day launches class action against Trafigura.
- February 2007: Trafigura agrees a $200m (£136.04m) settlement with the Ivory Coast government, but does not accept liability.
- March 2008: The Ivorian Court of Appeal says there is insufficient evidence to pursue criminal charges against the company.
- 11 September 2009: Carter-Ruck issues a ’super-injunction’ in the High Court on behalf of its client Trafigura to prevent
- The Guardian from publishing the Minton report.
- Mid-September 2009: Trafigura issues libel threats against
- The Guardian and the BBC via Carter-Ruck.
- 23 September 2009: Trafigura agrees to compensate 31,000 claimants with around £1,000 each. The payout offer amounts to a total of around £30m. The company refuses to admit liability.
- 12 October 2009: The Guardian contacts Carter-Ruck with a copy of Paul Farrelly MP’s parliamentary question, which refers directly to the Minton report and the injunction against The Guardian.
- 13 October 2009: The Guardian brings a formal challenge to the super-injunction before Mr Justice Tugendhat.
- 16 October 2009: Carter-Ruck lifts the injunction.
- 13 May 2010: Leigh Day and Trafigura’s lawyers meet in court to discuss costs.