A costs judge has found that a City firm preferred its own interests to those of the client as it billed for millions of pounds based on unenforceable funding agreements.
In Global Energy Horizons Corporation v The Winros Partnership (formerly Rosenblatt Solicitors) Master James found that three conditional fee agreements entered into by the firm with its former client were ‘tainted’ and in breach of rules governing how lawyers can request payment. The defendant, named as Winros Partnership but referred to throughout the judgment as Rosenblatt Solicitors, said it would seek permission to appeal.
GEHC said it found ‘fatal flaws’ in retainer documents with the firm and even accused Rosenblatt’s unnamed solicitor witness of lying to the court. The firm also said GEHC witnesses were dishonest and said the case was ‘in tatters on its facts and hopeless in law from the outset’. Rosenblatt partner Justin Nimmo, who acted on the underlying case, told the court that he felt like a ‘jilted lover’ after the retainer was terminated.
Master James said that despite working on a no-win no-fee basis and Rosenblatt accepting there had been as yet no ‘win’, the firm billed and was paid base costs of £5.6m in full. The firm said its client ‘volunteered’ these sums but could not point to any written evidence, written consent or even a file note made at the time. The costs master added that it sat ‘extremely uncomfortably on RS’s shoulders’ to assert it was protecting the client when the greatest drain on GEHC’s scarce resources was repeated requests for ‘voluntary’ payments.
The firm had ‘overreached themselves’, said Master James, and ‘certainly left GEHC’s best interests in their rear-view mirror’. She said that Rosenblatt ‘acted according to its usual wont in these proceedings, and billed GEHC as much as it could, at the earliest opportunity’.
She added: ‘RS has long billed and been paid its base costs (some £5.6m) in full from GEHC despite the normal expectation in “no-win, no-fee” cases that solicitors are paid when the clients are in funds following a successful outcome. The risk in these proceedings, far from being aligned, is to be entirely on GEHC’s side.’
The CFAs were ‘poorly drafted’ and were found to be invalid. The judgment states that Rosenblatt ‘preferred it own interests’ by redefining a loss under one CFA as a win under another, so as to enable the billing of those costs plus a 100% success fee after the event.
The court heard that Rosenblatt had secured a ‘famous victory’ in hard-fought litigation against a former GEHC partner, but issues between the lawyers and their client emerged when the firm valued the claim at $15m – a fraction of what the company thought it to be worth.
The firm, working on a conditional fee agreement, became concerned it would not recover costs when the sums involved were relatively modest, while GEHC wanted to press on in the belief its valuation made it worth proceeding.
GEHC, represented now by Eversheds Sutherland, told the court it had paid invoices rendered by Rosenblatt totalling £7.6m, with a potential additional liability of £3.4m. The firm highlighted that GEHC had yet to recover any more than it predicted, and that it was ‘throwing good money after bad’ having belatedly realised its advice was right. Rosenblatt said these proceedings were to ‘claw back’ fees paid to save face and an ‘unprincipled, unmeritorious and unjust’ attempt to deny any remuneration for 6.5 years of impeccable work, describing the case as an ‘oppressive attempted shakedown’. The firm has sought permission to appeal.
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