Hourly rate or success fee?

When considering the issue of what hourly rates to allow, in the preliminary issues judgment in Motto & Ors v Trafigura Ltd & Anor [2011] EWHC 90201 (Costs) (15 February 2011), amongst the relevant factors identified by Master Hurst was:

“I have no doubt in this case that Mr Day has taken responsibility for this litigation at great personal financial risk to himself, and financial risk to his firm generally.”

I don’t understand this.

The ‘financial risk’ was the risk that the claims would fail and, as they were being run on a ‘no win, no fee’ basis, no costs would be recovered. However, that is what the success fee is designed to cover and was considered elsewhere in the judgment.

To factor this in when considering what hourly rates to allow appears to be a case of double-counting.

7 thoughts on “Hourly rate or success fee?

  1. Is that right? What about all the resources the firm had to put in (additional staff, travel to the Ivory Coast), and the effect on cash flow of being unpaid for years? These are legit overhead costs.

  2. You risk cherry-picking one loose comment within a massively long judgment without having seen the points of dispute, replies, skeletons etc. The fact that Trafigura are not appealing hourly rates is telling here – suffice to say there were plenty of CPR 44.5(3) factors at play here which aren’t going to arise is everyday PI litigation.

  3. I actually agree with both views.

    In terms of risk then clearly that goes to success fee alone. Its like getting a client to realise that complexity goes to hourly rates and time expended and not to risk of securing a win

    Conversely on a “Big top end PI claim” run by london PI practices you expect circa £400 per hour for Partner rate. The above is clearly out of the “big top end PI claim” norm and the rate allowed was in reality actually not that much above the norm rate for a “big” london PI claim

  4. At risk of further cherry picking, that’s seemingly not the only inconsistency…

    Paragraph 396: “The decision which I have reached in relation to hourly rates does not reflect an additional element for the cost of security in the Ivory Coast…”

    Paragraph 480: “In my view it is also necessary to take into account the inevitable increase in overheads that will be incurred by having to employ people to work in dangerous conditions overseas.”

  5. That is not an inconsistency. People who have to go to Ivory Coast and work for weeks in dangerous and unhealthy conditions, and who can’t leave their hotel at night because it’s not safe, expect, and no doubt get, generous hardship allowances. That is the overhead. The security costs were a disbursement. As Andy Ellis says, there is no appeal on the hourly rate holding or, I understand, the security holding.

  6. Increased hourly rate for working in a dangerous and unhealthy environment? I’ll be quoting this case next time someone tells me Skelmersdale falls under Band 2…

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