The Royal Bank of Scotland (RBS) is set to accumulate around £125m in legal costs as it defends itself against 27,000 shareholders who lost money following its 2008 rights issue.
The shareholders, represented by Signature Litigation partner Graham Huntley, are the last remaining claimants after groups led by Quinn Emanuel Urquhart & Sullivan, Stewarts Law and Mishcon de Reya settled for £800m in December 2016.
Herbert Smith Freehills (HSF) is acting for RBS on the case, with a team lead by partners Adam Johnson, Simon Clarke, Kirsten Massey and James Norris-Jones. In June 2016, the firm came under scrutiny after it was revealed legal costs could exceed estimates of £92m.
According to an interim High Court decision, £6.5m of RBS’s costs were incurred in relation to defending four of the bank’s individual directors, including Fred Goodwin. A further £25m is estimated to be incurred from the date of settlement until the end of the trial.
In his judgment, Justice Hildyard stated: ‘The claimants are adamant that these costs are so unreasonable and disproportionate that only 50-60% would be recoverable on a detailed assessment: but even on that basis the figures would remain very large.’
In comparison, the judgment also reveals the claimants’ costs exceed approximately £20m, though not all amounts have yet been billed to the claimants.
Jonathan Nash QC, Peter de Verneuil Smith and Ian Higgins of 3 Verulam Buildings have been instructed by Signature Litigation, while David Railton QC, David Murray and Natasha Bennett of Fountain Court Chambers have been instructed by HSF.
The case has been dogged in controversy since it began 2014. In June last year Legal Business revealed Quinn, Stewarts and Signature were seeking millions worth of costs incurred from the claimants of Mishcon. Mishcon partner Richard Leedham, who took the instruction to lead the institutional clients from Signature last year, filed a costs estimate totalling £700,000 for legal work on the case up until that point. Mishcon settled the issue with the other firms weeks after.
RBS and HSF did not immediately respond to a request to comment.