A law firm acting in a professional negligence claim against another firm gave ‘unrealistic’ estimates and the incurred costs were ‘likely to be unreasonable’, a judge has found.
Senior costs judge Gordon-Saker ruled in Amanda Kenton v Slee Blackwell LLP that Amanda Kenton should pay costs of more than £60,000 to Slee Blackwell LLP – compared with a bill sent by the firm of £342,738.60.
Of that bill, £93,126.40 was payable to Kenton after a £432,000 deduction from the damages and costs paid by a firm of solicitors identified as ‘ABC’. The judgment said the amount to pay was £40,000 plus VAT and the reasonable success fee to be paid to the firm is £20,000 plus VAT, 50% of the basic charges.
Slee Blackwell argued the increase over the estimate was due to the extent of disclosure by the firm accused in the claim, which was eventually settled.
However the costs judgment concluded that a solicitor working in this field ‘should have a reasonable idea of how big those files are likely to be’.
The judge said: ‘In the absence of any evidence as to why the costs incurred far exceed the estimate, it is difficult to reach any other conclusion than that the estimate was inadequate. Based on my experience, the figures that the claimant was given were hopelessly unrealistic. This was a professional negligence claim which would probably be brought in the High Court seeking damages in excess of £300,000.
‘Realistic estimates would be multiples of the figures that were given. In my judgment, a realistic estimate of reasonable profit costs to settlement before the issue of proceedings would have been about £50,000, and a realistic estimate to the conclusion of a trial would have been at least £150,000.’
The judgment found that Kenton was not provided with proper costs information by the firm and was not given an updated estimate until mediation.
It added: ‘In circumstances where the client was given a hopelessly inaccurate estimate, relied on the estimate by entering into a conditional fee agreement, lost the opportunity of doing something different, was not given proper costs information, was billed a sum several times the amount of the estimate, and where the solicitor failed properly to explain the difference between the estimate and the costs incurred, the amount that the client should reasonably be expected to pay must be a figure close to the estimate upon which she relied.’
