“I EXPECTED THAT THE LAWYERS IN THE CASE WOULD WORK CONSCIENTOUSLY WORK WITHIN THE BUDGET WHICH I HAD SET. SADLY, I SENSE, THAT THEY HAVE NOT TRIED VERY HARD TO DO SO”

In Z (No.2) (Schedule 1: Further Legal Costs Funding Order; Further Interim Financial Provision) [2021] EWFC 72 Mr Justice Cobb carried out what was, essentially, a cost budgeting exercise in a family case. There are important observations about the need to work within budgets set.

“I expected – as all judges would expect – that the lawyers in the case would conscientiously work within the budget which I had set. Sadly, I sense that they have not tried very hard to do so.”

THE CASE

The judge was hearing an application in financial proceedings on divorce.  The mother applied for an upward variation of maintenance and £62,000 to cover future proceedings together with £5,500 for the next 6 months.

JUDGMENT ON THE COSTS ISSUES

The judge was critical of both sides in relation to costs.  There had been earlier hearings when costs had been considered. Both sides had exceeded the original estimates.

1. 1. It appears that by the Case Management Hearing in the welfare/medical hearing before Mostyn J on 10 June 2021, the mother’s projected costs were going to be c.£80,000 to run that application through to full hearing; Mostyn J provided for these costs as follows:

i) The mother’s alleged borrowing of £25,000 from her father (see below);

ii) Together with £33,151, being the unspent balance of the sum allocated (by my earlier order) to the Schedule 1 proceedings; this was re-allocated by Mostyn J to fund this welfare/medical application;

iii) A further sum of £22,000 awarded by Mostyn J.

1. 1. The mother overspent on this sum to the tune of £52,088; thus, it will be clear that the mother incurred £132,000 costs on her failed welfare/medical application.

1. 1. I should add that against that background, it is a point of further concern to me that the mother’s solicitors now ask for:

i) a further £62,000 to cover the costs of preparing for the FDR (see below),

together with

ii) a possible £42,000 to cover a short hearing to deal with possible wardship of Zoe (see §9 above and §48 below);

and

iii) shortly before the hearing, I was further advised that the mother’s solicitors had overspent to the tune of £24,000 as against the £20,000 allowed by Mostyn J.

1. 1. Before addressing the detail of this aspect of the claim, I would like to make one point of general importance. In BC v DE [2016] EWHC 1806 (Fam), sub nom Re F (A Child)(Financial Provision: Legal Costs Funding) [2016] 1 WLR 4720: (‘Re F (A child) (Financial Provision)‘), I said this at [22]:

“Though there is an increasingly familiar and commendable practice of lawyers acting pro bono in cases before the family courts, particularly where public funding provision previously available has been withdrawn, legal service providers, including solicitors and barristers, are not charities, nor are they credit-agents. It is neither fair nor reasonable to expect solicitors and the bar to offer unsecured interest-free credit in order to undertake their work; there is indeed a solid reason for lawyers not to have a financial interest in the outcome of family law litigation”. (Emphasis by underlining added).

I repeated the point in my earlier judgment in these proceedings ([2020] EWFC 80) at [30]. Mr Roberts predictably referenced these comments in his submissions.

1. 1. Let me say at once that I do not resile from the comments which I made in those earlier judgments; I meant them sincerely. However, I must confess to being dismayed to discover that the solicitors in this case have billed the mother sums significantly in excess of the amount which I awarded to cover the costs of the Schedule 1 litigation, and which Mostyn J ordered in relation to welfare/medical litigation; they can only have assumed that this overspend would be retrospectively authorised by the court. They were not entitled to make that assumption.

1. 1. Indeed, this called to mind the prophesy offered by leading counsel for the father instructed at the November 2020 hearing, at the point when I was fixing the original legal funding costs award that:

“…legal costs could easily spiral “out of control” at the rates claimed by the mother and her legal team. She describes the mother’s current and prospective legal costs as ‘eye-watering’, and expresses her client’s anxiety that allowing the mother’s claim in its entirety will give her a wholly undesirable licence, indeed an encouragement, to litigate” ([2020] EWFC 80 at [24], and see also [35]).

It is noted by Mr Roberts that while the father’s counsel expressed herself in those judgmental terms several months ago, as events have turned out, the father’s costs have risen exponentially (and indeed considerably in excess of the mother’s) in the period since those comments were made.

1. 1. If I had thought that my comments in Re F and in the earlier judgment in this case would have the effect of encouraging the mother’s solicitors, or indeed any solicitors in similar cases, to assume that they had carte blanche to bill their clients as they choose, I would not have made the comments, or I may have expressed myself differently. In November 2020, I set a budget within which I expected the mother’s solicitors to work. I did so having regard to a number of factors including:

i) the issues in the case,

ii) the ball-park likely value of the claims,

iii) my recognition that this is a ‘big money’ Schedule 1 claim,

iv) the father’s current and projected costs (see Theis J at [21] in PG v TW (No.1) (Child: Financial Provision: Legal Funding) [2014] 1 FLR 508)^[3], and

v) the professional standing of the lawyers instructed.

I cross-checked my assessment with what I considered to be reasonable and proportionate in all the circumstances. I expected – as all judges would expect – that the lawyers in the case would conscientiously work within the budget which I had set. Sadly, I sense that they have not tried very hard to do so.

1. 1. I earlier expressed my concerns about “the mother’s very considerable bills of costs to date” ([35] of [2020] EWFC 80); it will be remembered that £41,400 had apparently been incurred in costs in the limited three-week period immediately before Zoe was born (see [1](ii) of [2020] EWFC 80). The predilection for charging out billable hours at a significant, I suggest disproportionate, rate has continued. Ms Faggionato argues [position statement for this hearing §14]:

“It is becoming clear that the significant sums awarded towards M’s legal costs to date have not only encouraged M to litigate, but to do so unreasonably. This cannot continue”.

1. 1. The mother’s solicitors claim that they have had to incur costs significantly in excess of those awarded because the father has failed to engage constructively in the litigation; he has made no timely offers. Be that as it may, they have put the court in a difficult situation, having shown, in my judgment, insufficient restraint when accumulating their billable hours since the last hearing, notwithstanding my comments (referenced above). This is not the mother’s fault entirely (though the attention she seeks from her lawyers will of course have an impact on the costs incurred), and I am sure that her representation should not be compromised at this stage. That said, I am not prepared for my legal funding orders, and the rationale which lies behind them, simply to be disregarded.

1. 1. Looking at the extent of the overspend, and having regard to the arguments of the parties summarised above, I find that:

i) additional costs were inevitable in the welfare/medical case given the unexpected prolongation of the hearing by two days;

ii) it is likely that additional and unnecessary costs were incurred as a result of the MGF’s direct engagement with the process, and his contacts with the mother’s solicitors;

iii) the mother’s solicitors paid insufficient regard to the financial parameters set by the court.

I therefore propose to allow the mother to recover at this stage two thirds of the sum claimed by way of overspending (£34,724); this award will be reduced by a further 30% (£10,417) for a notional standard assessment. This leaves an award of £24,307.

(iv) Legal Funding order. First Appointment to FDR

1. 1. I had previously awarded the mother £65,000 by way of legal funding order to cover the period from November 2020 up to and including the FDR (see [2020] EWFC 80 at [35]). In relation to this sum, it is notable that by 10 June 2021, the mother had expended £31,000 (nearly one-half of the allowed sum before reaching First Appointment). Having re-allocated the balance to cover the welfare/medical hearing costs, the mother was awarded a further £20,000 by Mostyn J on 10 June within the Schedule 1 proceedings to cover her costs to the First Appointment (which sum has itself been overspent, see §30(iii) above).

1. 1. The mother now seeks further costs to conclusion of FDR £62,280. This means that by the FDR, the mother’s Schedule 1 legal fees will have been more than double what I allowed for eight months ago.

1. 1. The father’s projected costs are £70,000 between now and the FDR. While the mother’s costs have been significant to date, and she projects a further significant spend prior to FDR, it is not irrelevant (when considering the context of her spend) that the father has spent c.£190,000 since the last hearing.

1. 1. While I remain concerned about the spiralling costs of this litigation, in particular in light of what I have earlier said about the levels of billing, given the level of the father’s projected expenditure over the upcoming period, I am prepared to allow the mother a further sum of £60,000 by way of legal funding order to cover her costs to FDR. Any potential overspend will require prior court authorisation, or will otherwise need to be accepted at the solicitor’s risk.

(v) Legal Funding Order: section 8 CA 1989 issues

1. 1. In November 2020, the mother asserted a need for nearly £95,000 (a similar amount to the projected Schedule 1 costs) in anticipated legal costs for section 8 welfare proceedings; at that stage there was no real indication of any significant dispute between the parties; the medical issues had not come to light. I awarded the mother £25,000.

1. 1. The mother advises that this sum has now been spent. She gives this explanation:

“… we reached an agreement on [Zoe’s] surname on 14 April^[4], discussed mediation, early this year we discussed the prospect of [Zoe] and I visiting [State A], which was not possible due to [Zoe’s] health and the commitments on our time around this. We also discussed at length indirect contact, and touched on nursery plans”.

1. 1. That explanation does not, to my mind, reveal a good return for the money spent. The mother now seeks an award of £5,500p.c.m. to cover ‘welfare’ issues; this sum, it is said, “anticipates both correspondence and mediation”. Mr Roberts submitted:

“Issues to be resolved include finalisation of the name change, indirect contact, direct contact (US and London) and a parenting plan. Again, without funding Hunters will not be prepared to act”.

1. 1. As I have already mentioned, I believe that the name change has been finalised; the mother says so herself. Indirect and direct contact are plainly important but until Zoe has recovered from her operation, and the arrangements for global travel ease somewhat, direct contact is not likely to be a significant issue, at least until after the FDR. Indirect contact has taken place, and I detect no issue of principle about its resumption.

1. 1. I had encouraged the parties to mediate on welfare issues, and there is apparent willingness on both sides to do so. The father has proposed lawyer-assisted mediation; although Mr Roberts was, I felt, somewhat disparaging of the ‘lawyer-assisted’ element (“it is F who insists upon lawyer assisted mediation”), it seems to me (from a history that precedes Zoe’s birth and has continued since then) that, sad though it is to reflect, this couple will not venture very far without turning to their lawyers for advice.

1. 1. In my judgment, a proportionate sum to cover the ongoing costs of dealing with welfare issues at this stage would be £1,500p.c.m. (for lawyers’ fees). The father should cover his half of the costs of the mediator, plus the mother’s half share of that cost.

1. On the morning of the hearing, the mother’s solicitors sent through a schedule of projected costs in the event that the parties were to litigate over whether Zoe should be made a ward of court (a tentative suggestion floated by the President of the Family Division at the welfare/medical hearing). The mother’s solicitors indicate that her costs would be £42,000 for a short hearing (with written submissions) on this issue (less than half of this sum if the issue is dealt with on written submissions alone). I would like to place a marker at this stage (without hearing detailed argument) that £42,000 seems an excessive sum to cover the cost of preparing for a hearing on this limited issue. I have not formally been asked to make an award specifically in relation to this element, but, in the absence of agreement, I am prepared to consider brief (1-page A4) further written submissions from both counsel, when it is known whether an oral hearing before the President is required. They can address me on whether I should make an award in respect of this, and if so in what sum.