The Court of Appeal has flexed its muscle to curb lawyers’ costs twice in the space of a week. In Parsons v Convatec, the defendant had incurred £4.2m in costs and had initially sought approval for £10.2m in future costs.

The sums were to cover the defence of a dispute between an inventor scientist and his former employer over his claim for compensation from inventions and resulting patents developed during his work. David Parsons claimed for a maximum of £366 million and had himself incurred £2.7m in costs and sought approval for a further £5.3m in future costs.

The Court of Appeal was asked to decide the preliminary issue of whether the benefit from more than one invention or patent could be considered together. The final trial is listed for 37 days starting in February 2028.

The other issue in dispute was whether the court should limit the defendant’s recoverable costs budget, given the claimant’s financial position and insurance status, and specifically whether section 106 of the Patents Act 1977 applied to costs budgeting.

Giving the lead judgment, Lord Justice Arnold speculated whether costs had already become a significant obstacle to settlement, given that the parties had unsuccessfully attempted mediation three times.

The court heard that Parsons, whose solicitors are working on a conditional fee agreement, had obtained ATE insurance with an £800,000 limit. He proposed to the court that Convatec’s costs could be limited to his level of insurance cover, or alternatively to one-third of his own budget. Without such curbs, he submitted, then depending on the level of success his award could be wholly wiped out by payment of an additional ATE premium.

The defendant argued that the Patents Act did not apply to costs budgeting and that Parsons was in substance seeking a costs-capping order that only applied to one side.

Arnold concluded that the defence costs needed to be limited and restricted the Convatec budget to £4m, a decision which was supported by Lord Justice Baker and Lady Justice Asplin.

In a separate ruling handed down last week by the Court of Appeal, Lord Justice Fancourt was highly critical of what he called ‘astonishing’ counsel fees. The judge said the sums sought by way of security by the respondents in The Russian Federation v Hulley Enterprises Limited & Ors were ‘extraordinarily large’ and could not be justified.

The total sum expected to be incurred by the respondents was around £3.6m - the majority of which was disbursements, namely counsel’s fees. The profit costs for the respondents’ solicitors were £218,000 to the date of the schedule and estimated at a further £459,000 from then onwards. The respondent sought 70% of those sums as security, which Fancourt said was ‘much too high’.

He outlined how the leading counsel’s brief fee was £2m, with £375,000 for junior counsel’s brief fee. The leading counsel’s other fees included £60,000 to prepare an application for conditions and security for costs, £200,000 to adapt the existing skeleton argument and £100,000 for dealing with consequential matters.

The judge said: ‘These are very large numbers of hours being recorded or estimated. They give rise to doubt about the reasonableness of time spent prior to 1 June 2026 and the accuracy of the estimate and reasonableness of the allowances for work to be done in future. There are obvious questions about unnecessary duplication of work and the number of fee earners involved at various stages.’

He ordered security for costs of £975,000, comprising £600,000 for counsel’s fees and £375,000 for the solicitors’ profit costs, court fees, transcripts and costs consultants’ fees.