A judge has slashed 50% from a claimant’s costs after errors by her solicitors ‘that were as fundamental as they were inexplicable’.
In McNamee v LB Brent, Costs Judge Whalan found that the claimant’s representatives, London firm Duncan Lewis Solicitors, had 'grossly exaggerated' the true figure by more than 60%. The judge ruled that the inflation of costs was sufficient for Duncan Lewis to have met the test for misconduct according to the Civil Procedure Rules. The final assessed costs will be reduced by 50% to reflect this finding.
Whalan said: ‘The misrepresentation here represented a gross exaggeration of the claimant’s actual costs, an inflation that turned on numerous fundamental errors of calculation, proffered in a manner that was intended to induce the defendant to enter into a costs settlement that might well have exaggerated greatly their true liability.’
The firm had represented a claimant who fell on a broken paving slab and sustained multiple facial, dental and orthopaedic injuries. The London Borough of Brent settled the claim for £26,000 and agreed to pay the claimant’s costs.
The claimant’s solicitors proposed an initial bill of £208,583. This turned out to be considerably in excess of the formal bill of costs, which came to £140,430.
Solicitors for the defendant suggested the difference between the informal statement and final bill amounted to a ‘massive discrepancy’. It was pointed out that Duncan Lewis used hourly rates that were 25% above the rates allowable under the contractual retainer.
Read more
The firm had also claimed Grade A rates throughout for an individual fee earner, named as Ms Masood, when she was not at this seniority for the whole period. The defendant said these errors were not only ‘truly astonishing’ but also inexplicable: Masood, who had more than 10 years’ experience, claimed to have spent 9.3 hours drafting the statement of costs, so this was not a hurried compilation by a novice practitioner.
The defendant went as far as to say Duncan Lewis had appeared to exhibit a misunderstanding of the duties owed by a solicitor and a ‘very troubling lack of insight’.
Duncan Lewis accepted its statement of costs represented a ‘highly exaggerated approximation’ of the actual costs but said this was ‘due to an inadvertent oversight and was not an attempt to mislead’. The firm said the errors in hourly rates and overstated hours arose from the statement being prepared by a solicitor with no costs training ‘who adopted a broad brush approach based on her understanding of the file’.
The judge accepted there was an element of broad brush calculations during informal negotiation about a receiving party’s costs. But he said there had to be ‘some recognisable limits’ to this and that the inflation of costs still required explanation.
‘Unjustifiable exaggeration discredits the process as a whole and toleration of this will discourage the early settlement of inter partes costs, to the mutual disadvantage of the parties and the court system generally,’ added Whalan.
A spokesperson for Duncan Lewis Solicitors said: 'We acknowledge the court's findings and accept that serious errors were made in preparing the informal statement of costs in this case. The fee earner involved no longer works at Duncan Lewis. We have since strengthened our procedures with mandatory costs specialist oversight and enhanced training.'
