High legal fees in court cases to be scrutinised
November 4th, 2008 by GilesThere is to be a fundamental review of the costs of civil litigation. Lord Justice Rupert Jackson has been appointed to head the review which begins in January, with a report scheduled for issue in December next year.
There is concern in Government and legal circles that legal costs are too high and the English courts are losing out to other jurisdictions. A number of high profile cases in recent years have seen some very high fees - e.g £5.2 million for the fees of one City law firm in a 5 day case involving Blackberry earlier this year, and more than £100 million in the ten years of litigation involving the creditors of failed bank, BCCI.
Legal fees in the City of London are matched in extravagance only by those in New York, so it is hardly surprising that there is a certain amount of “forum shopping” for commercial litigation whenever this is feasible.
Under English law the winning side almost invariably gets costs awarded in its favour and, while this usually means only about 70 per cent of the fees are in fact recovered, it also means that those with deep pockets can use the court system to threaten smaller companies or individuals and access to justice is in danger of becoming the prerogative of the rich. In other countries, the claimant may have to bear his own costs.
Jackson LJ will be assisted in the review by a small group of experts.
Whether City law firms will reduce their fees in the coming recession remains to be seen - in recent years hourly rates have been rising at way above the rate of inflation. But there is some retrenchment - the Financial Times reports today that at least one City firm is cutting costs - by cancelling its firm-wide Christmas party for the staff!