Cleary Gottlieb criticised for charging out top lawyers at £1,131 an hour
‘No justification at all’ for eye-watering rate, rules Lord Justice Males
A Court of Appeal judge has criticised Cleary Gottlieb Steen & Hamilton for charging “more than double” standard hourly rates.
The firm accepted the sums claimed were in excess of the guideline rates, but told the court “that is almost always the case in competition litigation”.
Lord Justice Males, ruling on the costs of appeal in Samsung Electronics Co. Ltd & Ors v LG Display Co. Ltd & Anor, said this was “no justification at all”.
“If a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided,” said Lord Males. “It is not enough to say that the case is a commercial case, or a competition case, or that it has an international element, unless there is something about these factors in the case in question which justifies exceeding the guideline rate.”
Cleary Gottlieb had successfully represented the respondents in the appeal and submitted a schedule claiming costs of £72,818. These included the costs of its solicitors, who bill in US dollars, but the court converted as charges between £801.40 and £1,131.75 for Grade A fee earners and between £443.27 and £704 for Grade C fee earners.
The appellant pointed out these fees were well above, and in some cases more than double, the recommended hourly rates for central London firms working on “very heavy commercial and corporate work”.
The guidance recommends Grade A (solicitors and legal executives with over eight years’ experience) should charge £512 per hour, with Grade C (those with under four years’ experience) set at £270.
Lord Males noted the appeal took place over one day, was not documentation heavy and centred around a “modest” claim of £900,000. He accepted the respondent’s submission that it allocated work to more junior members where possible.
Accordingly, the court cut the respondent’s costs award by almost a quarter to £55,000.
Cleary Gottlieb has been approached for comment.
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14 Comments
Al
I wonder what the engagement letter says about paying any shortfall?
But that’s the joys of litigation. I seem to recall that, on average, for every £100 recovered in litigation there are £170 costs.
The BSB require us to give transparent details as to fees and costs risk. My personal costs info starts with a (possibly apocryphal) quote from Daniel DeFoe:
“I have been ruined but twice. Once when I lost a lawsuit and once when I won one”
I also point out the difficulties of converting a judgment into actual cash (and that that’s not my problem)
Amazingly people still want to litigate.
Anonymous
Almost certainly the client will have to pay the shortfall unless the solicitors let them off.
Anon
From the article Cleary was defending its client against a claim for £1m and won so it seems like it’s money well spent?
Litigator
Lol, I doubt Cleary are agreeing to limit their bill to costs recovered. The client was free to go somewhere cheaper if they wanted to stand a chance of recovering anywhere near 100%.
Despite the criticism by the judge, 75% costs recovery is actually pretty standard. I imagine Cleary and their client were very happy with the assessment, if not the comments.
Pedantic Jobsworth
Lord Justice Males. Not Lord Males.
Clearly Greedlieb
Haha had to squeeze that extra £1 in.
Literally every civil litigation practitioner
c. 75% recovery on summary assessment on the standard basis is actually a decent result.
Litigator
Notwithstanding the judge’s comment, it looks like Cleary successfully defended its client against a claim for £900k and its client managed to get back £55k out of £72k spent on having Cleary represent it from the other side.
That is a very good result for the client. Generally, being able to recover 76% of what you claim for costs in a commercial case is pretty damned amazing.
anonymous
Additionally reading the (v. brief) judgment Males LJ is not saying that these rates were unjustifiable per se, rather that no substantive attempt had been made to justify them rather than by a bland reference to the practice area in which the fee is being charged. Rates above the guidelines are regularly awarded if proportionate to the size of the matter, the other side’s fees and – critically – the amount of time being charged for the relevant genius at that rate.
Litigator
Also couldn’t help seeing from the judgement that the other side Covington was using a silk whereas Cleary instructed a junior…
Anonymous
Yeah but how senior was the junior?
Anonymous
You might think you work hard, but you don’t work as hard as the legal cheek stock images of banknotes
Anon
This is just naive from the judge and shows he is out of touch with the modern economy. These are the charge-out rates for partners at top firms. Former MC firm used to charge £1.000+ per partner – I suspect because they are British, the courts will say nothing about them.
Wondering
What rates did Males charge before he went to the Bench?
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