Watson Wyatt, the consultancy that failed in a $70m (£45m) claim against Maxwell Batley in October, has been refused leave to appeal and ordered to pay more than £1m in costs

Its own costs, which will go to Simmons & Simmons, Christopher Moger QC of 4 Pump Court and Brick Court’s Simon Salzedo, are estimated to be in excess of £2m.

The original High Court claim was believed to be the largest negligence action against a law firm since the demise of the Solicitors’ Indemnity Fund (SIF) in 2000.

The £45m action and the prospect of an appeal posed a serious financial threat to 16-partner firm Maxwell Batley, as its professional indemnity insurance cover stood at just £20m when the claim was issued.

Employment consultancy and actuarial firm Watson Wyatt was originally sued for £45m by Belgian telecommunications company and Maxwell Batley client SITA for creating an unsatisfactory employee share scheme that resulted in SITA having to pay $58m (£37.1m) in social security charges.

Watson Wyatt tried to claim up to the entire £45m from Maxwell Batley as it had drafted the share scheme documents, and continued with this action despite settling with SITA for £22m this April.

The costs judgment reveals that Watson Wyatt sought to deprive Maxwell Batley of some of its costs because the law firm refused to enter mediation prior to the High Court action.

But despite this year’s landmark Dunnett v Railtrack decision, which paved the way for judges to deprive litigants who refuse to mediate of some costs, Mr Justice Park still awarded Maxwell Batley its legal fees on a standard basis.

The judge found that Watson Wyatt had attempted to “dragoon” and “browbeat and bully” Maxwell Batley into mediation to force the law firm to settle the case, which would help it pay SITA.

A Watson Wyatt officer even told Maxwell Batley’s law firm Barlow Lyde & Gilbert that its reputation would suffer if Maxwell Batley was not advised that mediation was the best way forward.

In his judgment, Judge Park stated: “Watson Wyatt was not interested in compromising [in] the dispute between itself and Maxwell Batley. What it was interested in was getting Maxwell Batley to come up with the money which would bridge the gap between what it hoped itself to pay in settlement of SITA’s claim.”

Maxwell Batley was represented by Barlows partner Richard Harrison, Justin Fenwick QC of 4 New Square and Thomas Lowe of Wilberforce Chambers.