COSTS OF IN-HOUSE SOLICITORS: THE APPROPRIATE APPROACH
In Sidewalk Properties Ltd -v- Twinn  UKUT 0122 (LC) the Upper Tribunal (Lands Chamber) considered the issue of the appropriate rates to be charged by an in-house solicitor and the appropriate basis for an inter-partes award.
- The services of an in-house lawyer should normally be calculated by reference to the hourly rates claimed by solicitors in private practice.
- A court or tribunal should not embark upon an exploration of the overhead rates of an in-house lawyer.
- The costs recoverable, however, would be limited to those sums which the receiving party would have paid if it were paying the costs itself.
- In the current case the costs were limited to those costs which the receiving party would have paid if it had negotiated a fixed rate deal with an appropriately qualified private practice solicitor.
The landlord company retained an in-house solicitor to act on its behalf in several cases relating to applications under the Leasehold Reform, Housing and Urban Development Act 1993.
- The landlord had sought to claim £6,615 for the work done.
- The First Tier Tribunal(“the F-tT”) had allowed £1,105.
- The F-tT had rejected the argument that the landlord’s costs should be based on the costs of the work done by a private practitioner.
THE DECISION AT FIRST INSTANCE
The F-tT had decided that:
- A commercial landlord retaining private solicitors in these circumstances would negotiate a fixed fee. The similarity of these cases would lead to economies of scale.
- The work justified a grade A solicitor.
- The sum of £1,105 was allowed at a lower hourly rate than that of a private practice solicitor.
On appeal Martin Rodger QC, Deputy President, found:
- The correct approach was that set out by the Court of Appeal in Re:Eastwood (deceased)  Ch 112. The charges recoverable should be based on the charging rates of solicitors in private practice.
- The proper approach is to follow the method of assessment used by solicitors in private practice unless it is reasonably plain, either from a concession or from material before the court or tribunal, that a party is not entitled to recover more than its actual expenditure..
- The pragmatic decisions of the Court of Appeal were aimed to avoid a detailed enquiry into in-house overheads.
- The F-tT should have given the landlord the benefit of the doubt arising from Eastwood and taken the costs which would have been charged by a solicitor in private practice as its guide when assessing the reasonable costs.
- The F-tT had given a direction in relation to the filing of overheads by the landlord’s lawyer. This direction had been ignored. However that direction should not have been made.
- The assessment should have been done by reference to the costs of a Band A solicitor in private practice.
- The F-tT had found that if the landlord had been personally liable to meet the costs it would have negotiated a fixed fee for the whole package of work. Competition would have led to the appropriate reates at the bottom of the Band A scale at around £230 per hour.
- The figure allowed by the F-tT of £1,105 was too low. It was revised on appeal to £1,680. This sum would “properly reimburse the appellant without yielding a profit, for the legal services it reasonably required…”