Top corporate firms are increasingly resorting to court action to secure unpaid legal fees, the Gazette has learned.

In the past six months, the number of cases filed in the Queen’s Bench division of the High Court between top-50 firms and clients has more than doubled, according to court ­registers.

From the beginning of March 2008 to the end of August 2008, top-50 firms filed six claims against individuals and companies. From the start of September 2008 to the end of February 2009, 15 such cases were filed.

Court action usually comes as the last step in a dispute over unpaid fees because of its high cost and potentially damaging effect on client relationships.

Of the 15 cases lodged in the six months to the end of February, six were from City firm Nabarro. This is more than any other top-50 firm. Managing partner Nicky Paradise said: ‘We are pretty efficient at keeping on top of our debts, and monitor very carefully our bad debts. If all else fails, we will set out an action.

‘At the end of the year we will have a look at our bad debt provision and see if that has gone the wrong way. Being prudent, we will probably make a bigger provision.’

A number of top corporate firms have already predicted that they expect to double the percentage of outstanding legal fees they classify as unrecoverable (see [2009] Gazette, 5 March, 3). Data gathered from top firms’ latest accounts and industry sources suggested that firms will increase their write-off estimates to as much as 20% of outstanding fees – amounting in some cases to tens of millions of pounds. For the year ended 30 April 2008, this figure was between 3% and 9%.

It is normal practice for firms to write off a proportion of outstanding legal fees as ‘bad’ or ‘doubtful’ debt if they think they will not be able to recoup these fees in full.