A BLUEPRINT FOR TROUBLE? A CAUTIONARY TALE FOR ANYONE CONSIDERING “ALTERNATIVES” TO SOLICITORS IN LITIGATION

The judgment of Master Matthews in Lyons -v-Kerr-Robinson [2016] EWHC 2137 (Ch) contains a cautionary tale for anyone proposing to use an alternative to solicitors to conduct their litigation.  The defendant in this case used licensed conveyancers. Their charges were “extraordinary”; the conveyancers ceased practising leaving no-one with any practical means of redress.

“On any view this is a large number of hours, at a high rate of charge, even for a partner in a City law firm. For a barrister retained by a small firm of licensed conveyancers, even in the West End of London, it is remarkable. And, in the context of a dispute over an estate worth a few hundred thousand pounds at best, it is extraordinary.”

THE CASE

The defendant was defending an action in relation to her administration of an estate. She appointed a firm of litigators to act on her behalf in that litigation.  It is important to note:

  • The firm in question (Blueprint) had subsequently been closed down the Council of Licensed Conveyancers.
  • The Council of Licensed Conveyancers had disclaimed any liability to indemnify the Estate.  The losses took place in the course of probate and litigation work which Blueprint were not authorised to carry out.

However it is the scale of the charges that is surprising.

THE FEES INVOLVED

  1. First I consider the two payments amounting to £86,765.12, paid to Blueprint on 28 March and 26 May 2012. Blueprint was a firm of licensed conveyancers, regulated and authorised to provide conveyancing services by the Council of Licensed Conveyancers. According to its headed notepaper in March 2012, it then had three directors, including Mr Shamiso Gondo, who was shown as possessing a law degree. Blueprint was not however authorised to carry out contentious probate work, nor to provide litigation services. Nevertheless, in relation to this case at least, it appears to have done both of these things. In his second witness statement (at [11]), Mr Gondo accepted that Blueprint could not conduct litigation, but relied on counsel authorised by the General Council of the Bar to do so.
  2. The Defendant in her second witness statement, dated 17 February 2016, explained how she came to use Blueprint. When the Defendant was faced with these proceedings, she confided in a work colleague, who told her that her husband was a barrister. This was Samuel Okoronkwo. According to the Claimants he was not then in fact a barrister in private practice, but employed by a company called Capstone Sports Management Limited (see John Bay’s first witness statement, [17]). If that is right, then he would not have been able to appear in court on behalf of anyone other than Capstone. Be that as it may, Mr Okoronkwo referred the Defendant to Blueprint, with which he appeared to be connected. In her evidence the Defendant said (at [38]) that he was “listed as personnel in the client care letter I was sent”. I refer further to this below. And, as will be seen shortly, his time was charged for by Blueprint as one of its fee-earners.
  3. On 27 March 2012 Blueprint sent the Defendant a retainer letter. The letter is not signed personally, but the internal reference contains the letters SG, so it probably came from Mr Gondo. It referred to a meeting on 26 March 2012 at which “detailed instructions” were taken. It refers to an agreement between them that the Defendant would
“immediately transfer into Blueprint’s client account for safe holding the current balance of the funds you presently hold on this matter and provide us with the account statement so that we can be in position to confidently state to the other side no dissipation of assets.”
Client care terms were enclosed. This gave details of “Personnel and charging rates”. Charging rates were stated to be “hourly rates”. These details included “Mr Samuel N Okoronkwo (Counsel) £550”, and two other members of staff, including “Mr Shamiso H Gondo £250”.
  1. As already mentioned, on 28 March 2012 the Defendant paid to Blueprint out of estate assets the sum of £59,657.71 by CHAPS transfer to Blueprint’s client account. On 26 May 2012 she paid the further sum of £27,107.41 also out of estate assets to that account. These monies were estate assets. Between the two payments came the hearing before Arnold J on 4 April 2012. Mr Okoronkwo represented the Defendant at that hearing. The day before, on 3 April 2012, the Defendant’s defence, settled by Mr Okoronkwo, was filed on her behalf by Blueprint, as if it were acting as her litigation solicitor.

THE INVOICES RENDERED B Y BLUEPRINT

  1. On 11 May 2012, Blueprint rendered an invoice (numbered BP/AKR/002) to the Defendant for legal services between 4 April and 10 May 2012. This was for profit costs of £97,167.50 plus disbursements of £799.70, making a total of £97,967.20. VAT of £19,433.50 was then added to this, making a grand total of £117,400.70. The invoice is unusual, because fees for Mr Okoronkwo as counsel are not shown as a disbursement (as would be normal) but instead as part of profit costs, as if he were a fee-earner employed by (or a partner in) Blueprint. The lion’s share of the “profit costs” (£58,905.00) were incurred by Mr Okoronkwo himself, who was charged out at the rate of £550 per hour for just over 107 hours’ work, in a period of some 24 working days (ie excluding weekends and bank holidays). On any view this is a large number of hours, at a high rate of charge, even for a partner in a City law firm. For a barrister retained by a small firm of licensed conveyancers, even in the West End of London, it is remarkable. And, in the context of a dispute over an estate worth a few hundred thousand pounds at best, it is extraordinary.
  2. The invoice just referred to ran only from 4 April 2012, whereas Blueprint had become involved from at least 26 March 2012, when there had been a meeting to take instructions. It appears that there was an earlier invoice from Blueprint (apparently numbered BP/AKR/001), but no copy was available to me. There is a redacted bank statement for Blueprint showing that the sum of £55,523.40 was taken over from Blueprint’s client to office accounts on 4 April 2012. This statement gives the client reference and invoice number for the Defendant (ie BP/AKR/001). This invoice would have covered a maximum of 8 working days, ie from 26 March to 4 April inclusive. During this time Mr Okoronkwo would have drafted the Defendant’s defence, and prepared for the hearing on 4 April. Further statement entries show “bill payments” of £3400 on 25 May and £27162 on 28 May, both giving the same client and bill reference. There may be other take-overs too. Some of the (limited) records available at the hearing were equivocal. But the three take-overs mentioned add up in total to £86,075.40.
  3. In relation to the scale of charges levied by Blueprint, I should mention the statement of costs apparently prepared by it for the hearing before Michael Brindle QC on 7 December 2012. It is stated to cover the period from 26 March to 7 December 2012 (ie since the beginning of the matter). This sought a grand total of £360,814.30 (apparently excluding VAT) for the work done for the Defendant in the proceedings to that point. It states for example that Mr Okoronkwo (shown in the list of fee-earners) claimed to have spent 394 hours at £550 per hour, making £216,700, out of £347,770 for all fee-earners. However, there is no evidence that this was ever served on the Claimants, or filed with the court.
THE RESULT: THE DEFENDANT WAS PERSONALLY LIABLE TO REPAY THE COSTS PAID TO BLUEPRINT
  1. As to whether the Defendant acted reasonably in defending these proceedings, I record that, first of all, the Defendant engaged lawyers who were in fact not authorised to conduct litigation at all. Second, the Defendant agreed to the retainer of Blueprint, including their high charging rates, instructing Blueprint to go ahead, and did not place any kind of cap or limit on the value of the work which Blueprint did or the charges it could make. On the materials before me, she made no enquiry, let alone complaint, about the very high charges that were made by Blueprint in its two invoices.
  2. These are not the hallmarks of an administrator anxious to look after the interests of the Estate. I accept her evidence that she was told by Blueprint that her costs would come out of the Estate. But that just made it all the more necessary for her to take care. On her own case, it was not her money she was spending. In my judgment the Defendant was not acting reasonably in the way that she defended these proceedings.
  3. Overall, I am not satisfied that it was proper for the Defendant on behalf of the Estate and at the Estate’s expense to engage Blueprint to defend the Defendant in the litigation in which she was involved. That means that, in accounting to the court-appointed administrator, she cannot claim to deduct the monies paid to Blueprint for its services. Prima facie, she must therefore pay over to the administrator the sum of £86,075.40, being the minimum amount which can be demonstrated to have been paid out of estate monies towards the satisfaction of Blueprint’s invoices for legal services.

2 comments

  1. Michael · · Reply

    It seems astonishing that nobody involved in this litigation – neither the various solicitors and counsel involved nor the court staff – made a rudimentary check to verify that Blueprint were actually solicitors.

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