LEGAL COSTS and OVERCHARGING

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We've all heard this story before and all to often, but, why are legal costs so high?  Why do the courts allow costs on the scale they do and how can costs be worked out fairly, when the result is often worth less than the cost of litigation.  Overcharging by solicitors appears rife, and take a look at the stories reported below.

Some of the people charging exorbitant sums for their services are not even properly qualified.  Solicitors can charge anywhere between £80 and £160 per hour.  Some of you might agree that if a solicitor were to use his specialist knowledge properly, he or she might clear up a matter in a couple of hours.  If that was the case, you might agree that £200 - 300 for specialist handling of a matter was reasonable.  So might we.  Read on though at the unfolding story of a fledgling company that wanted a so called trademark specialist to read over a statement, they had prepared themselves:-

He looks like a good Judge of things

The companies concerned in this matter are Novagraff - J E Jackson Evans & Co Limited of Parchment House, Northburg Street, London and Custom Rickshaws of Oakwood, Herstmonceux.  Custom Rickshaws allege that they contacted Helen Whelbourn for a quote on a trademark matter.  Over the phone they were told it would be £1,000 to lodge a trademark opposition and a further £2,000 for representation at a hearing.

Custom Rickshaws made it clear they wished to contain costs, hence would lodge their own application, but asked Helen Whelbourn to give their application the once over prior to it being lodged.  It was also made clear that the application may not proceed.  Helen Whebourn explained to Custom Rickshaws, that she was familiar with the history of the application they were potentially opposing.  For this reason Novagraaf were chosen, since there would then be no research, the lady concerned already having knowledge on the matter.  However, Novagraff, via Helen Whelbourn, had agreed with Custom Rickshaws that they had a case for opposition based on the failure of one party to perform as agreed as grounds for refusal under Section 3 (6) of the Trade Marks Act 1994.

It turned out the application was not necessary and was never lodged.  Custom Rickshaws advised Novagraff of this and expected to be billed a couple of hundred pounds, since Helen Whelbourn had only written a couple of letters.  Custom Rickshaws then received a whopping £1,880 bill.  Custom Rickshaws estimated the time taken to write those letters would not have exceeded 2 hours at most.  However, they were willing to pay up to £400 to settle the matter and hoped J E Jackson Evans & Company Limited might see reason.  Especially, since they had not asked Ms Whelbourn to write one of the letters, which effectively questioned the earlier advice she had given to Custom Rickshaws.

Since that time Novagraff have refused mediation and employed the services of Mrs O'Reilly of Credit Solutions Limited of Barlow House, 3 Butler Hill, Carshalton, Surrey, SM5 2TW.  We understand that Credit solutions have issued a Final Warning, hence the parties are limbering up for a hearing.  We also understand that Custom Rickshaws will be counterclaiming against the rate of charging, which they say may of itself constitute a criminal offence.

We should like to hear from Helen Whelbourn or any other person from Novagraaf - J E Jackson Evans & Co Ltd. or Credit Solutions Limited, or indeed any other person experiencing similar difficulties with either of the parties mentioned above - for their side of the story.  Please email us at:

information @ bushywood . com

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The Guardian  Wednesday June 16, 2004

Abuse by solicitors is revealed as so widespread and costly that the government plans to launch its own service. Jamie Wilson and Alan Travis for the Guardian Newspaper, detail the extent of overcharging and exploitation.

More than 120 solicitors firms have been overcharging millions of pounds from the legal aid budget for handling asylum cases, the Guardian has learned.

The scale of the abuse is so serious that the government will this week announce plans for a pilot of its own public immigration and asylum legal service.

The move follows investigations by the Legal Services Commission that led to £8m of legal aid being recouped from law firms allegedly involved in overclaiming.

The Guardian has obtained the names of 10 of the worst offending legal firms which have had their contracts for acting in asylum cases terminated by the commission, which is responsible for legal aid, as a result of abuses ranging from repeated overclaiming to putting clients at risk through bad advice.

Two of the most serious offenders for putting clients at risk, according to the commission, were Jonathan & Co, in Islington, and Purcell Brown, in Haringey, both in north London. They were both criticised for "extremely poor handling of cases, poor quality of advice and putting clients at risk".

Last year a high court judge criticised Jonathan & Co for "milking" the legal aid fund to fight "hopeless cases" on behalf of asylum seekers.

Both firms have now gone out of business. Jonathan & Co was closed down by the Law Society, while a new law firm has taken over the premises of Purcell Brown. A spokesman for the new firm yesterday said the previous owner had "disappeared".

Another firm, MK Sri and Co, based in Harrow, north-west London, is alleged by the LSC to have overclaimed to the tune of £447,000. The commission said it had recouped the money from the firm and terminated its contract. It added: "Termination may not mean that the immigration firm has abused its powers."

Kanapathipillai Sritharan, who runs the firm, yesterday disputed the amount, and said the firm's contract for legal aid in asylum and immigration cases had not been terminated by the LSC. "We were compelled to pull out of the contract because of the way we were treated and this happened to a lot of other solicitors as well," he said.

The new public immigration and asylum service pilot scheme will be based in Birmingham and open for business this autumn. It is being created to give the LSC a direct idea of the real cost of immigration and asylum legal aid, as well as to identify inefficiencies and pressures, and best practice.

In the last financial year, immigration and asylum expenditure spiralled to £204m, partly because of the Home Office's policy of speeding up initial decision making and appeals on immigration cases to clear the backlog.

THE LAWYER MAGAZINE NOV 17 2003 -  Court costs shackled by fee-capping case.

The courts have given claimant and defendant lawyers the green light to apply for each others litigation costs to be capped for the first time.

Both sides will also be able to determine which level of fee-earner can perform certain tasks, such as letter writing, in order to control the other sides costs.

In the first case of its kind, Ledward v Kent & Medway Health Authority which involved 59 claimants alleging rape by a consultant gynaecologist, the judge in the costs hearing Master Hurst ordered claimant costs to be capped at £395,000.00 and the defendants at £460,000.00

Master Hurst said the claimants law firm, Jane Loveday, had produced an analysis of its work that contained gross overestimates of the amount of work that still had to be done on the case.

According to costs expert Jim Diamond of Legal Budgets, the case will have a knock-on effect on what clients are charged in litigation. This is the beginning of the end of solicitors over-charging said Diamond.

Now the courts can control costs, and this will have massive ramifications for what solicitors can charge their clients.

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