Dechert’s fee dispute – a sign of things to come?

For a while now legal business soothsayers have been forecasting an increase in fee disputes between solicitor and client.

The news that ENRC is contesting an extremely high proportion (almost 70 per cent, or £11m) of Dechert’s £16m legal bill might be the result of a freak storm, but equally it could portend a deeper climate change.

A dispute over £11m is serious commercial litigation on any level.  If the parties have to resort to the costs court to determine the outcome the prospects of an early resolution will not be enhanced.  Detailed assessment between the parties is a very cumbersome process is high value cases at the best of times.  When that assessment falls under the jurisdiction of the Solicitors Act both parties (but particularly the law firm) enter a whole new world of pain where 19th century authorities are dusted off and deployed. 

Quite apart from the spectre of a line-by-line trawl through time records and thousands (or hundreds of thousands) of emails the court may have to determine issues such as whether a bill is an ‘interim on account’ bill or an ‘interim statute bill’, and what is and is not included in the “one-fifth rule” to determine after the assessment is over who should bear the costs of it. 

It is by no means certain whether the Part 36 regime which so often focuses the parties on settlement in normal commercial disputes even applies in Solicitors Act assessments.  Need I go on?  I think best not to. 

I doubt very much that it is possible to find a happy medium between what are already onerous professional compliance requirements and a natural desire just to get on with the job without constantly looking over one’s shoulder.

Litigation lawyers are wrestling with Jackson implementation.  The gallery was full to overflowing in last week’s hearing of Mitchell v NGN, populated with nervous practitioners waiting to hear how near the Court of Appeal might travel towards the Singapore model of zero tolerance for missed deadlines (in that case for the submission of a budget).

No wonder perhaps that in the commercial litigation sector law firms have been fighting a rear-guard campaign to stay out of the costs management provisions of LASPO.  But is avoidance the answer?

One collateral advantage of the nascent discipline of legal project management, of which budgetary control is a key function, is that it should reduce the prospects of major fee disputes arising deep into a project.  The concentration on the definition of assumptions, project plans and variation procedures provides a mechanism to reduce the capacity for nasty surprises. Yes, it adds a layer of front-loaded costs (and there are enough of those already) but the alternative is less palatable still.

Andy Ellis, costs lawyer and managing director, of Practico