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Ex-client wins re-hearing over Eversheds’ £1.6m costs bill

By John Hyde

The High Court has asked a costs judge to look again at an international law firm’s bill for work on a property dispute.

In Harrison v Eversheds LLP, the Honourable Mrs Justice Slade DBE ordered the detailed assessment of Eversheds’ profit costs and counsel fees be remitted after agreeing two grounds of appeal.

The firm had been challenged by a former client, property entrepreneur Mark Harrison, after it invoiced him for £1.6m for work on a case that settled part-way through trial. The bill comprised £863,000 profit costs and £739,000 disbursements.

The firm’s first estimate going back to October 2012 was £333,000. It had increased to £548,000 by a second estimate in February 2013.

Last November, costs judge Master Rowley limited Eversheds’ profit costs to £650,000 and said disbursements, including counsel’s fees, were not subject to any limit.

Following a one-day hearing in May, Harrison successfully argued that Rowley had erred in holding it was reasonable for Eversheds to recover profit costs up to double the amount stated in its second estimate.

The High Court also agreed that the costs judge should have limited the recovery of disbursements in respect of counsel’s fees. HHJ Slade said the costs judge had ‘exceeded the broad measure of his discretion’ in considering such a high upper limit.

‘The award by Master Rowley of an increase of more than £300,000 in profit costs above those anticipated in the second estimate required explanation and justification,’ said Slade.

‘Master Rowley erred in principle in relying on the level of the increase in the profit costs of his opponent’s solicitors when nothing was known about the assumptions, advice and information on which it was based.’

Slade said the costs judge had failed to take into account the second estimate of counsel’s fees. These were originally estimated at £211,000 but had increased to £739,000 by the final invoice.

While she agreed the that increased length of the trial, from four or five days to 10 days, warranted an increase in fees, the judge said it was not open to Rowley assess fees in the final sum claimed.

It was submitted by Eversheds’ lawyers that ‘substantial additional unanticipated’ work was done after the second estimate: disclosure had been a much longer task than originally thought, with amendments to pleadings and a new serious allegation made against Harrison in a counter-claim. The firm had to make trips to Atlanta and Monaco to meet Harrison, while counsel’s fees ‘reasonably increased’ as a result of developments after the second estimate.

Eversheds declined the Gazette’s invitation to comment on the case.

(Courtesy: Law Society Gazette)