“One of the important skills of a solicitor is to know how to delegate less important work to less expensive fee-earners.”
In the recent case of Rushbrooke UK Ltd v 4 Designs Concept Ltd [2022] EWHC 1416 (Ch) the Court considered the costs claimed by a successful Respondent.
This is an interesting case which provides some guidance on a number of issues, namely:
- The approach to be adopted in relation to hourly rates, particularly those claimed in excess of the Guideline Hourly Rates;
- Delegation to junior fee earners and;
- How serving a Schedule of Costs less than 24 hours before an application hearing does not necessarily mean that the costs will be disallowed.
Hourly rates
In cases where hourly rates in excess of the prescribed Guideline Hourly Rates are claimed, there must be evidence that the work undertaken was “above average in either difficulty, or in complexity, or in novelty, or in importance to the client”. In this case, the Judge did not believe that the work carried out was above average either in difficulty, complexity, novelty, importance to the client or in some other way. A figure slightly above the guideline rates would not be deemed to be too high but a figure of £89.00 (34%) in excess of the relevant guideline rate was too high.
“In my judgment, both criticisms of the respondent’s costs schedules by the applicant have some force. The new costs guideline hourly rates came into force in October 2021. They are of course merely guidelines, but they represent a consensus view of what average work should cost in particular areas of the country(so taking into account regional variations) and the experience and expertise of the relevant fee-earner. I see nothing in the present case to suggest that the work done here was above average either in difficulty, or in complexity, or in novelty, or in importance to the client, or in some other way. This was, if I may respectfully say so, typical business work. A figure slightly above the guideline, so to say, within touching distance of it, would not be too high. A figure £89 (34%) above the guideline in my opinion is too high.” – HHJ Paul Matthews
Delegation
Fee earners should “know how to delegate less important work to less expensive fee earners.” In this case, no attempt was made to identify work which could have been delegated to a lower level of fee earner. The Judge expressed his dissatisfaction that all of the work had been undertaken by a Grade A fee earner. In the event that there was no junior fee earner to delegate to, then the question arose as to whether the costs were reasonably incurred and reasonable in amount.
In this particular case it appeared that the idea of delegating had not even been considered. The Court held that the test of reasonableness takes account of potential delegation and it is “not for the paying party to have to identify work which could have been done by a more junior fee earner.” One example provided by the Judge was that he did not believe it was justified for a Grade A fee earner to sit behind experienced Counsel at the hearing and that this could quite easily have been done by a Grade C or D fee earner.
“I am unhappy with the notion that everything here has been done by a single grade A fee-earner. One of the important skills of a solicitor is to know how to delegate less important work to less expensive fee-earners. Sometimes it is said that, well, there was no one else to delegate to (I do not know whether that is the case here). The answer to that plea, of course, is that, as between himself and his solicitor, the client is quite entitled to insist on the grade A fee earner doing everything. On the other hand, as between him and his opponent, he or she is not necessarily entitled to require the opponent to pay for it. At that stage the question is instead whether the costs are reasonably incurred and reasonable in amount. And reasonableness takes account of potential delegation.
Moreover, it is not for the paying party to have to identify work which could have been done by a more junior fee-earner. In my former experience over 30 years as a practising commercial litigation solicitor, there were no litigation cases that I was involved in in which no work whatsoever could have been delegated to a more junior lawyer. In the present case, for whatever reason, it seems that it has simply not been considered. For example (and it is only an obvious example), there was no need for the grade A fee earner to attend at the hearing and sit behind experienced counsel, who did all the advocacy. A grade C or D fee earner would have been fine.” – HHJ Paul Matthews
Service of Schedule of Costs
An updated Schedule of Costs was not served on time by the Respondent. The Applicant accepted that costs should follow the event but challenged the updated Schedule of Costs “on the grounds that it was filed and served after the hearing, instead of 24 hours before” in accordance with CPR PD 44 para 9.5(4)(b). However, the Judge held that the Applicant had sufficient time to consider the updated Schedule and take instructions on its contents; further, the Applicant would not suffer any prejudice as a result of the late service. It was deemed that the Court was entitled to take into account Schedules of Costs which were served less than 24 hours before an application hearing on the basis that such Schedules were relatively brief and “the substance of them can be taken on board in a matter of minutes.”
Conclusions
Taking into account the issues noted above, the Judge considered that the quantum of costs claimed by the Respondent were too high. The total sought by the Respondent was £8,988.00 (inclusive of VAT). The Judge reduced the solicitors’ costs for both excessive rates and failure to delegate and awarded a total of £7,920.00, reducing the original figure by circa 12%.
The Judgment serves to reinforce the point that where hourly rates in excess of the prescribed Guideline Hourly Rates are claimed then these must be justified by reference to the facts of the case (i.e. difficulty, complexity, novelty, importance to the client etc.)
On the issue of delegation, Rushbrooke UK Ltd demonstrates that where there is no delegation then Receiving Parties can expect an element of the costs being claimed to be considered to be unreasonable.
Finally, there have contrasting decisions on the impact of serving a Schedule of Costs less than 24 hours before an interim hearing. In this particular case the Court took the view that so long as there is sufficient time for the Schedule to be considered and there is no prejudice suffered then the same will be deemed acceptable. However, as always, compliance with deadlines is the best approach to take to ensure potential sanctions are avoided.
If you require any advice or assistance on the Rushbrooke UK Ltd ruling or any aspect of legal costs, please contact our Senior Partner, John Mistri, by calling 0800 086 2929 or by emailing jmistri@elitelawsolicitors.co.uk
