Mason Hayes Solicitors

Recovery of In House Counsel Costs

It has long been established by the principles enunciated within the case of Re Lloyds Bank Ltd v Eastwood that the costs of In House Counsel on an inter partes basis are recoverable, such costs would be allowed in the usual manner and that they would be assessed using the conventional method of assessment in all but special cases where it was reasonably plain that that method would infringe the indemnity principle.

In House Counsel can therefore recover its costs employing an hourly rate commensurate with that of an equivalent solicitor in private practice.

However, what is the position regarding the recovery of costs incurred by In House Counsel where they continue to have an involvement in a case despite having instructed external lawyers? This was answered by Master Campbell of the SCCO in the case of Ultraframe (UK) Limited v Eurocell Building Plastics Limited and (2) Eurocell Profiles Limited in a written judgment 31st July 2006.

The case arose out of a claim for damages relating to Patent Infringement and was exceptionally complex, resulting in the Claimant Company employing its own In House Counsel and of necessity External Lawyers.

The Claimant was ultimately successful and recovered damages with the Defendants being ordered to pay the Claimant’s costs on a Standard Basis.

A bill of costs was duly prepared incorporating both the costs incurred by the In House and External Lawyers, and this was opposed by the Defendant on the bases it amounted to a double recovery, the In House Solicitors were not on record as acting, and they stood in the shoes of the client giving instructions to the External Lawyers.

The issue was dealt with as a preliminary issue which was heard by Master Campbell on 12th June 2006 in which he was asked to answer the following legal issue:-

“Subject to those costs being reasonably incurred and reasonable in amount, are the costs of work done by a Solicitor employed by a Corporate Litigant recoverable on a between-the-parties basis if at the material time that Litigant had their Solicitors on the record ?”

Much argument was put forward by both sides and the writer will not bore you with the technical arguments but eventually Master Campbell answered the question as follows:-

“In my Judgment Part B of the bill (Costs of the Employed Solicitor) is recoverable in principle, where the tasks undertaken by Ultraframe “in-house” can be measured and are distinct from those undertaken by Hammonds (external solicitors). If, and to the extent that there is no distinction and the work is duplicated, this will be irrecoverable, but that is a matter of quantum not principle. It follows that my answer to the question posed by the point of dispute (Defendant’s opposition to the claim), as refined by the Claimant, is in the affirmative.”

It was anticipated that the decision of Master Campbell would be appealed but the Defendant’s did not do so, and consequently the case remains persuasive and is thus far the only case to determine this issue.

Neil Clifford, Costs Lawyer

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