The High Court has significantly reduced a party’s legal costs after ruling that high earners were unnecessarily engaged. In Dana Gas PJSC v Dana Gas Sukuk Ltd & Ors, Lord Justice Leggatt said the £1.47m bill submitted for work on two sets of proceedings was ‘obviously unsustainable’.
Investment management firm BlackRock had been added to the action as a defendant and contested the shareholder claim at a trial on a preliminary issue of law. Those proceedings involved a two-day hearing last September and three further court appearances.
After succeeding on the preliminary issue, which was not specified in the costs judgment, BlackRock faced a three-day hearing where the claimant made several new applications to the court – all unsuccessful.
BlackRock, represented by US-headquartered firm Weil, Gotshal & Manges, sought 60% of the £1.47m as a payment on account and applied to the court for its costs.
Leggatt LJ made no comment on whether fees charged by BlackRock’s lawyers represented good value for money, but only if the costs incurred exceeded the sums that were likely to be recoverable. Even taking into account that lawyers were instructed at short notice and on an urgent basis, the judge said a number of criticisms aimed at BlackRock’s costs were valid.
Hourly rates were found to be ‘extremely high’: nine fee earners were involved, of whom six had their time charged at hourly rates of more than £700, with a top rate of £946. Trainees were charged out at £282 an hour.
Leggatt said: ‘From my experience of assessing costs and reviewing cost statements and budgets in complex cases in the Commercial Court, competent representation can be obtained at much lower rates, in the region of around half the hourly rates paid in this case.’
Of the 37 hours attending on counsel and 38 hours attending on the client, more than half was spent by partners charging at least £900 an hour. The amount of work done by partners was found to be ‘disproportionately large’.
Leggatt also noted that four solicitors attended each of the court hearings, included the two partners on at least £900 an hour. The judge said it was more reasonable to claim the costs of attendance by no more than two solicitors.
On the costs of later applications, Leggatt accepted they involved a tight timetable but said the amount claimed bore ‘no reasonable relationship to the level of costs likely to be regarded as reasonable and proportionate’.
Overall, Dana Gas was ordered to pay a total sum of £425,000 on account of costs within 14 days.
Dana Gas PJSC was represented by Daniel Hubbard, instructed by Squire Patton Boggs. BlackRock was represented by Andrew Scott, instructed by Weil, Gotshall & Manges (London) LLP