A senior costs judge has ruled that a London firm breached its professional duties by failing to advise adequately on how litigation costs were mounting.
Master Leonard said the defendant firm in Newman v Gordon Dadds LLP provided nothing more than a ‘very limited estimate’ for initial work trying to settle a family/corporate dispute without litigation.
When that plan failed, the master concluded that Gordon Dadds’ failure to advise adequately on further estimates ‘deprived the claimant of the opportunity to make an informed choice about seeking alternative, less expensive representation for the litigation that followed’. The firm’s partner working on the matter was retained on a £450 hourly rate.
The claimant, Adam Newman, had asked the court to restrict costs to £10,000, which was the initial estimate made in a letter of retainer from August 2017. He subsequently paid a series of bills up to the end of 2017, coming to almost £76,000. But he has yet to pay a further £61,000 for bills rendered from January to May 2018, now arguing that recoverable fees should be limited to the initial £10,000 figure.
Newman said there was ‘hardly any discussion’, and no written advice, from Gordon Dadds about what he could expect costs to be as the litigation progressed. The judge ruled that evidence entirely supported his case, and that once the original estimate was exceeded a further assessment was required.
The master stated that any solicitor undertaking work for a client has a professional obligation to provide them with an estimate of costs and to keep that estimate up to date. He noted that the authorities showed that it may be appropriate to limit the amount payable if a proper estimate was not given.
He concluded that Gordon Dadds’ failure to give any further estimate of costs was a breach of its professional and contractual obligations to Newman.
But on the issue of what should be paid, the master rejected the suggestion this should be limited to the initial £10,000. By the time a mediation meeting organised three months after that costs estimate had been unsuccessful, the Master said it was clear to everyone that the initial, less costly, strategy had also failed. Once the bills in dispute started being issued, the first estimate was ‘no more than an historical footnote’. Newman, in his written evidence, did not deny being aware of the costs as they accrued every month.
The master said there might well be a case for limiting the costs recoverable up to May 2018, reflecting what Newman would have spent on alternative solicitors. But evidence about what other firms might have cost did not produce a reliable and fair figure, so it was wrong to limit recoverable costs to any specific figure.