As Costs Draftsmen we are in the business of assisting our solicitor clients to obtain the best possible return for the work reasonably completed by them. In this update we are looking at the issue of outsourcing.
It is the case that claims can legitimately be made inter partes, or from the Legal Services Commission, for more than has been paid out to agents. The rationale behind such claims is that the solicitor’s practice is ultimately responsible for the work carried out if it is done by de facto fee earners.
Several judgments have dealt with this issue over the last 11 years and the most recent was in the case of Ahmed v Aventis Pharma Ltd [2009] EWHC 90152 (Costs), before Master Gordon-Saker at the Senior Courts Costs Office on 19 November 2009. This was a publicly funded matter and the conclusion unenthusiastically reached by the Master was that the work can, indeed, be charged as if the solicitor had carried out the work and therefore was recoverable at solicitor’s hourly rates, no matter what was charged by the external agent.
This particular judgment looked at a claim relating to the sorting of medical records by an agency. The agency charged £841.75 (22.75 hours at £37 per hour). The solicitors claimed for the work within their documents schedule at the LSC prescribed hourly rate, plus an enhancement. It was held that 17.5 hours of the work was proper to a fee earner and was allowed at the prescribed rate plus 25% enhancement, together with an amount of £154.80 for photocopies (not fee earning work, but allowed as exceptional). Therefore (assuming the £66 county court rate) the solicitors recovered from the LSC £1,598.55, being almost double the amount actually paid out to the agents.
Earlier judgments, which were referred to in the above case, had concluded that the following were all recoverable at fee earner rates, even though the work had been carried out by agents:
(1999)Enquiry agent inspecting documents together with client. (i)
(2002)Litigation support agency preparing a witness statement. (ii)
(2007)External costs draftsmen’s fees for preparing statements of costs/bills/conducting detailed assessment proceedings. (iii)
The precedents are equally applicable to publicly funded cases and to privately funded cases, including those funded by CFAs and since the claim is included as profit costs then enhancements/success fees are potentially recoverable on the work done.
(i)Smith Graham (a firm) v Lord Chancellor’s Department [1999] 2 Costs LR 1
(ii)Stringer v Copley (17 May 2002, unreported)
(iii)Crane v Cannons Leisure Centre [2007] EWCA Civ 1352, [2008] 2 All ER 931