Lord Justice Leggatt of the High Court has been forced to scale back legal costs after US firm Weil, Gotshal & Manges racked up £1.5m in fees representing client BlackRock.
Investment management company BlackRock defended a case against energy firm Dana Gas last year and in November BlackRock was deemed successful on a preliminary issue. As a result, BlackRock produced an estimate of costs amounting to £408,000 and asked the court to order Dana Gas pay 60%. After Dana made seven further unsuccessful applications to the court, BlackRock again demanded 60% of its costs to be paid. Overall, it estimated its costs to be £1.47m.
But Leggatt LJ described Weil’s hourly rates as ‘extremely high’, despite conceding that solicitors were required on an ‘urgent basis’. Nine Weil fee-earners were involved in the case, with six of them charging hourly rates of over £700. The top rate was £946, while a trainee was charged out at £282 an hour.
Further, of 37 hours attending on counsel and 38 hours attending on BlackRock, over half of that time was spent by partners charging over £900 an hour. Leggatt LJ held: ‘In terms of efficient use of resources, the amount of work done by partners seems disproportionately large.’
Ultimately, he ruled the costs ‘obviously unsustainable’ and ordered Dana to pay a total of £425,000.
Weil had instructed Blackstone Chambers’ Andrew Scott. Dana was represented by Squire Patton Boggs, who enlisted One Essex Court’s Daniel Hubbard.
Excessive costs have been heavily scrutinised since The Royal Bank of Scotland (RBS) last year accumulated over £100m in legal costs as it defended itself against a group of shareholders who lost money following its 2008 rights issue.
In an interim 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.’
Herbert Smith Freehills acted for RBS on the case, with a team led by partners Adam Johnson, Simon Clarke, Kirsten Massey and James Norris-Jones.
Weil Gotshal did not comment.