Uplifts and Additional Charges.

Regular readers of our website will possibly recall the case of Centenary Six Limited (in liquidation) v TLT LLP which related to a professional negligence claim brought by the liquidators of a company against their former solicitors.

The first division of the inner house of the Court of Session recently issued an important procedural decision in relation to the maximum amount of expenses recoverable for a successful party. In certain circumstances the party awarded expenses by the Court can be awarded an “additional charge” if justified by different grounds. These grounds include:

1. The complexity of the proceedings and the number, difficulty or novelty of the questions raised;
2. The skill, time and labour and specialist knowledge required of the solicitor;
3. The number and importance of any documents prepared or perused;
4. The place and circumstances of the proceedings or in which the work of the solicitor in preparation for, and conduct of, the proceedings has been carried out;
5. The importance of the proceedings or the subject matter of the proceedings to the client;
6. The amount or value of money or property involved in the proceedings;
7. The steps taking with a view to settling the proceedings, limiting the matters in dispute and limiting the scope of any hearing.

In this case the successful pursuers enrolled a motion to allow a 300% additional charge for the first instance proceedings, 250% for the appeal proceedings. In actual fact the Court ultimately granted 75% and 30% respectively.

In doing so the Court considered the fact that in Sheriff Principal Taylor’s review of expenses and funding in civil litigation in 2013 it was suggested the maximum percentage uplift (additional charge) ought to be 100%. That maximum was ultimately not adopted by the Scottish Civil Justice Council. However, the Court indicated that it agreed in broad terms that normally 100% should be the maximum. That approach was on the basis that the current unit rate (currently less than £200 per hour) “represented reasonable remuneration for the average solicitor in the ordinary Court of Session case”.

The reality is that the current unit rate probably represents around half of the market rate for the average solicitor dealing with commercial disputes in the Court of Session. This is why fees recovered in the Court of Session can be so low when expressed as a percentage. In any event, we may have sympathy with the Court’s approach that if the unit rate is said to represent a reasonable amount, it follows that 100% uplift would represent a significant increase in the agent’s income in a given case. In reality, it is generally simply improving recoverability. The Court indicated that the previous rule of 10-15% additional charge per ground found is a useful method whereby the Court can reach a rational decision on the uplift quickly after determining the number of grounds involved. The Court said “it is important to realise that a rule of thumb is just what it is. It is a broadly accurate guide, based on practice rather than theory. It may be departed from, if there is a good reason for doing so… but having such a guide will promote consistency in decision making.”

It is certainly useful to have a better understanding of how additional charges will be dealt with by the Court. Sheriff Principal Taylor’s review was referring to commercial or case managed litigation but we suspect this is an approach that may be endorsed across the Scottish Courts.

If you want to discuss any of the issues raised in this Blog, Eric Baijal would be happy to help and you can contact him on emb@bbmsolicitors.co.uk or speak to him on 01955 604188