Some Bakers with a disproportionate amount of dough
A High Court judge has deemed Baker McKenzie's fees to be disproportionate, in a case where partners are charging more than £800 an hour.
In a costs and case management conference, Judge Roger ter Haar KC told Baker McKenzie's client, Associated Newspapers Ltd, that it should reduce its estimated costs by about 15%.
Associated Newspapers, which owns the Daily Mail, is bringing a £10m claim against Buckingham Group Contracting Ltd, regarding the construction of a printing facility, with the matter set for a 12-day hearing.
The judge noted that the publisher's legal budget of £3.18m exceeded that of the defendant's estimated costs of £1.87m by a "significant margin". He highlighted that the "most importance difference" between the parties was the "hourly rates charged by the respective solicitors."
Baker McKenzie's 'Grade A' partners for the case are charging £801 an hour (compared with a guideline rate of £512), and its 'Grade D' trainees charge £216. In contrast the defendant’s highest paid partners at Weightmans charge £215 an hour.
The judge commented that although it is within Associated Newspapers’ right to “make use of expensive and experienced lawyers,” it should also consider delegating work to more junior lawyers.
The judge gave Associated Newspapers an “opportunity" (hint, hint) to come back with a revised budget, and suggested that the costs estimates should be trimmed by around 15 per cent.
A source at Baker McKenzie with knowledge of the case told RollOnFriday "this sort of reduction is not unusual", and added that the firm has now presented its revised costs budget to the court.
£800/hour for a top firm litigator is fairly cheap. My litigation partner charges £1300/hour. I think the market is too ignorant about what the market rate is these days. People also need to understand that lawyer hourly rates go up every year due to rising lawyer costs and inflation.
£5m in fees for a £10m claim.
Pretty clear who the winners are in this case.
Wait till they find out that real estate Partners are charging £1000 an hour for copy paste financing arrangements.
No, Real Estate partners' fees are far lower - usually some of the lowest in the firm.
Also, the hourly rate in RE is largely irrelevant as they typically charge a fixed fee. I have dealt with large property portfolios inhouse for FTSE100 companies and when outsourcing work, I tell the RE partners not to even dare refer to their hourly rate.
Can anyone explain why £801ph rather than £800?
I visited a two car dealerships last week. BMW and Vauxhall. Oddly BMWs cost more. Outrageous, surely all cars should be the same price...
The irony of a KC suggesting someone else is charging too much. I hope Mr Justice Ter Haar isn't planning on returning to the bar because presumably opposing counsel with have a veritable field day with whatever he charges just to show up on day one!
@ Impartial Judge
At the risk of being pedantic (what else if RoF for?), but the "market" cannot be ignorant because it's the market that sets the rate by what is tolerated by the consumer of the product/service. If it's too high... people go elsewhere.
If I were paying £1300 hour, I would expect a rudimentary understanding of economics to be a given - perhaps that is why your shop charges £1300 hour?
Also, out of curiosity, what are "lawyer costs" and why are these linked to inflation. As we are paid for our knowledge does this have to increase; is it index linked? If so, I plan on having some really expensive thoughts in time for the end of year....
This is a bit of a non-story given that Bakers were only told to shave 15% off their costs.
More interesting is the fact that the defendant firm (Weightmans) was charging only £215 for a partner!
I wouldn't get out of bed in the morning for £215 an hour.
That's barely a paralegal rate.
Well you probably would, given that (assuming you work a relaxed 35hrs a week and 48 weeks a year) you'd be making £361,200 before tax. The problem, of course, is that nobody actually sees that - it's a wholly notional figure except for the poor sod who's paying it.
With the greatest of respect to Bakers litigators, they are probably spending most of the time working out how construction works.
Seriously, why would you instruct Bakers to do construction litigation and not a specialist?
Possibly because they have an international practice in this area and are ranked in the various directories for it?
@ Wish I knew... 11 November 22 09:53
I had read the post referred to as sarcastic. I suggest you do too.
The Weightmans partners are charging £100 less per hour for their time than my firm charges for mine. I am a paralegal.
This only highlights that the "guideline rates" are not fit for purpose and should be abandoned or limited to small-medium claims. There are literally no litigation Partners at top-tier disputes firms who charge £500/hr (let alone senior Partners leading the claims).I suspect my firm is far from alone in topping out Partner rates at £1,100+. In fact, you'd be hard pressed to find a mid-senior associate under £500 at Linklaters, Slaughters, Quinn, Herbert Smith, Lovells, Skadden or 20 other disputes firms. The judges know this, they routinely wave through costs awards without any regard to "guideline rates" in big commercial litigation.
It's fair that they do so, given that (i) parties generally go for equality of arms and agree these rates; and (ii) no one is policing the rates that Laurie Rabinowitz or Mark Howard are charging by reference to an arbitrary determination of what an average barrister should charge.
So what is the point of the guideline rates?
(As an aside, this sounds like a non-story. B&M charging £800 is entirely unremarkable, except that it resulted in a budget of £3.5m for a claim under £10m. That's a proportionality argument, not a newsworthy criticism of the fact that a partner at a huge law firm charges £800).