Dentons: Question over level of costs claimed
The Solicitors Regulation Authority (SRA) has been ordered make an interim costs payment of £200,000 to global law firm Dentons after last month’s important Court of Appeal ruling.
The court held yesterday that the SRA should pay 65% of Dentons’ costs of the SRA’s successful appeal of the original Solicitors Disciplinary Tribunal (SDT) ruling and of the law firm’s successful appeal against that.
But it raised questions about the level of costs claimed by Dentons.
The case concerned Dentons’ breach of the Money Laundering Regulations. While the SDT said it did not amount to professional misconduct, Mrs Justice Lang held that it did on a ‘strict liability’ basis.
The Court of Appeal disagreed, deciding that a solicitor’s breach of their regulatory obligations only amounted to misconduct if was “sufficiently serious”.
It nonetheless upheld Lang J’s ultimate decision to quash the SDT ruling and remitted the decision on misconduct and possible sanction to a differently constituted tribunal.
In the costs ruling, Lord Justice Bean, vice-president of the Court of Appeal’s civil division, Lord Justice Jeremy Baker and Lord Justice Zacaroli described Dentons as “substantially the successful party in respect of the appeals from the decision of the SDT”.
There is no presumption in cases before the SDT that an order for costs should be made in favour of a solicitor who had been successful.
But the Court of Appeal rejected the SRA’s argument that this should apply to appeals from the SDT as well.
“The approach applied in the SDT is based on the fact that the SRA’s regulatory responsibilities require it to bring properly justified complaints to the SDT’s attention without fear of the ‘chilling effect’ of an adverse costs order,” it said.
“That sets the SRA aside from an ordinary litigant in civil litigation. The same does not apply, however, where, as here, the SRA has the benefit of a determination by the SDT and challenges it on appeal. In that context its position is in our judgment more akin to that of a normal litigant.”
Dentons’ costs were nearly £800,000, with £356,000 incurred in the High Court and £438,000 in the Court of Appeal. This is nearly 4.5 times higher than the SRA’s costs.
With the court awarding Dentons 65%, this would amount to £516,000.
But the judges cast doubt on this sum in deciding on the payment on account.
“The matter was no doubt of considerable importance to Dentons, but the question on assessment of costs payable between litigants is not whether it was reasonable for Dentons to choose to instruct such expensive solicitors and counsel, but whether it is reasonable for the resulting cost to be imposed on the SRA.
“In our judgment, given the enormous amount of their costs for a matter that lasted a day in the High Court, and involved substantially a repeat of the same arguments at a hearing of less than two days in the Court of Appeal, a substantial discount is appropriate in arriving at a fair estimate of the likely level of recovery.”
The court ordered the SRA to pay £200,000 within 21 days.
Dentons welcomed the decision. The SRA had no comment.