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Friday, 18 May 2007

The cost of a good cigar case

Today's Lawtel subscriber-only service picks up last month's decision in the Supreme Court Costs Office of Master Rogers (25 April 2007) on a dispute as to the ultimately successful party's first instance trial fees in the controversial Mastercigars case (see IPKat posts here for the first instance ruling and here for the Court of Appeal's reversal of it). Mastercigars had instructed Withers in these proceedings, which turned on whether the importation of a sizeable quantity of Cuban cigars into the UK was done with the consent of the trade mark owner. The trial was estimated to last for four days and a costs estimate of some £206,000 was made. As luck would have it, the case became increasingly convoluted, the four days turned into 18 and Mastercigars' bill soared to over £1 million.

Master Rogers was asked to determine what exactly Withers' original estimate had been intended to cover. Mastercigars conceded that far more work had been done than was predicted, but that it had effectively done all that work itself, just leaving it to Withers to put that work into proper form, such as the preparation of witness statements for use at court. According to Mastercigars, Withers was in breach of the Solicitors' Costs Information and Client Care Code in failing to provide a revised estimate as costs escalated. While it was accepted that exceptions to that estimate arose in relation to fees of both leading and junior counsel for the additional days, plus solicitors' attendance in court, Mastercigars said that preparation for extra days of the hearing should be on a pro rata basis by reference to the original estimate.

The Master held that Withers had failed to comply with the Client Care Code by not warning Mastercigars that costs were escalating well above the original estimate. The giving of such a warning was not contingent on receiving a request from Mastercigars. The client might well have been aware that unexpected twists and turns were going to bump up the costs, but that was not the same thing as realising that it was going to cost five times the original estimate. Accordingly, on all the evidence, oral and documentary, Withers was bound by its original estimate, subject to Mastercigars' concessions.

The IPKat thinks this is right, but has some sympathy with firms of solicitors in complex disputes: it's a bit like salvage, in that your first thought is to rescue the sinking ship, put out the fire (or whatever the problem is) and only then do you step back and start worrying about the cost and who pays for it. This is really an issue that can be resolved by management, organisation and decent software. Some law firms have gone a long way towards the transparent taxi-metering of a client's costs and it's probable that others will follow. Merpel says, how much would it have cost to try the same issues in France, Germany or the Netherlands?

Most expensive cigars here, here and here
Famously expensive litigation here

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