Court redefines who earns the fees

The High Court ruled that a firm was justified in charging for a private eye as if he were a fee earner, writes Roger Pearson.

A recent High Court decision has given law firms increased flexibility when it comes to charging for subcontracted work.

Mrs Justice Hallett, in the case of Smith & Graham (solicitors) v The Lord Chancellor's Department, ruled that in the right circumstances, firms that take on outside help are entitled to charge for such people's services as if they were fee earners.

The decision, says Barry Gray, senior partner with Smith & Graham, the Hartlepool firm whose charges were challenged, will give firms more leeway to increase their number of fee earners when the occasion demands.

The case involved Hartlepool MP Peter Mandleson's former election agent Bernard Carr, who was accused of misusing expenses. The action was dropped at the eleventh hour and Gray has no doubt that some of the credit for that goes to the work of former Metropolitan Police chief inspector, Bill Fryer, the private investigator who the firm charged for as a fee earner.

Gray says: "We wanted to bring him into the planning strategy, into the case-building strategic planning group. There was going to be more than one person involved in this case and there would have to be a considerable amount of discussions, debriefing and what have you. We were completely justified in that we were able to increase the level of our staffing on a temporary basis by using highly-qualified support staff who then could be diverted into other activities.

"Six of our 20-odd lawyers do nothing but crime. We have support staff and Mr Fryer is generally employed on police station work.

"But on a case such as this we wanted to divert him and we felt we were entitled to divert him to fee-earning work in the Crown Court and be paid accordingly.

"He is a trained ex-chief inspector with the Metropolitan Police, a trained clerk when it comes to criminal law and an accredited police station representative.

"We considered it was fair to charge for his services as if he were a member of our staff.

"However, the taxing officer at the end of this case took the view that charging should have been on a disbursement basis as Mr Fryer was a private investigator.

"It was pointed out that in the past we had charged for his services as disbursements. However, we said it was entirely a matter for us."

In the High Court it was argued for the Lord Chancellor that Fryer, as an independent contractor, could not be regarded as a fee earner and that there was insufficient information about his skills and the work he had done.

However, ruling that the firm was entitled to charge for his services, the judge said: "Despite the limited nature of the information before me, I am satisfied that the nature of the work Mr Fryer was instructed to do here was work which it was appropriate for a fee earner to do.

"I doubt that anyone would have considered it inappropriate in a case such as this for the solicitor in charge of the case, or someone similar, to have carried out the work himself and make a direct charge to the client.

"The fact that Mr Fryer was not actually employed by the solicitors does not in my judgement exclude him from the definition of fee earner."

Gray says: "This has paved the way for firms, particularly smaller firms, to increase the number of fee earners on a temporary basis.

"Bill Fryer spent hours digging through councillors' expenses and the judge said this was clearly fee-earning work.

"This decision is very definitely in the interest of clients who otherwise would have to make do with what a firm can muster at any one time.

"It will create greater flexibility, enabling an awful lot more investigative work to be done."