Scott Morgan and Irwin Mitchell - £1,875.13 clawed back from compensation deductions, but questions about hourly rates and ATE insurance go unanswered

We are pleased to have resolved our client Scott Morgan's dispute over legal fees with Irwin Mitchell

Scott was involved in an accident in September 22 when a vehicle coming in the opposite direction suddenly tried to turn right across his path. He sustained some quite serious injuries and in due course approached Irwin Mitchell to deal with his compensation claim. They did so under a Conditional Fee Agreement (a "no win, no fee" agreement) and advised Scott to also take out an insurance policy (an "ATE policy") to give him some protection against costs if his claim was not successful.  

The Defendant driver's insurers made early "interim" payments of compensation of £20,000 and the claim was finally settled by the end of June 23 for compensation of £100,000. The Defendant driver would be paying Irwin Mitchell's costs, but not any success fee or premium for the ATE policy.

Irwin Mitchell retained £14,317.75 from Scott's compensation. They said that the costs they estimated were technically payable by him (over and above any that would be met by the Defendant driver) were £33,224, but that that amount was limited by their contract to £14,317.75. They said they would finalise the figures once they had completed the process of recovering costs from the Defendant driver.

Scott was concerned by this because the figures seemed large, and it was that that prompted him to instruct us.  

We asked Irwin Mitchell to update us on the process of recovering costs from the Defendant driver, because obviously the more that could be recovered against her, the less there was for Scott to pay. We chased in July, September and October and ended up having to threaten a formal complaint on Scott's behalf.

Finally, on 18^th October, we were able to see the costs that Irwin Mitchell had claimed for Scott against the Defendant driver. They had sought £69,082.10 from her. Scott had not been asked to approve that claim. They estimated that, out of the £69k that they had claimed, more than £17k would not actually be recoverable from the Defendant driver. On top of that was a success fee of £11,293.75 and the insurance premium of £3,024.00.  

So this time the amount that Scott was technically liable for in costs was £31,754.71 but that was limited by their contract to £14,317.75 – the amount they had already deducted.

We asked Irwin Mitchell to do two things –

1. To explain why they had incurred more than £17k in costs that they did not think would be recovered from the Defendant driver, and

2. To provide details of records in relation to the insurance premium, including their mandatory records under the SRA Financial Services (Conduct of Business) Rules

Irwin Mitchell did not reply to us but, on 2^nd November wrote direct to Scott, letting him know that the Defendant driver's insurers had made an offer to pay £50,000 in costs against the £69,082.10 that they had claimed from her.  

Irwin Mitchell advised Scott –  

"I believe that the Court is likely to order your opponent to pay an amount towards your legal costs within a range between £47,500.00 and £52,500.00. The reason for this is mainly due to the rates claimed. For work done in Manchester for a case that settled for £130,000.00 it is likely the claimed rates would be reduced."

Once again, it was suggested the outcome would be that Irwin Mitchell would keep the full £14,317.75 that they had deducted from Scott.

In our view, statements like this about rates at the end of a case are really quite concerning. A client, though on a "no win, no fee" deal needs to understand properly that the rates to which he or she is being asked to commit may not be allowable against an opponent, and that he or she will be left with an inevitable shortfall that might eat heavily into their compensation.

We asked Irwin Mitchell for further explanation about their hourly rates : exactly what rates did they think were likely to be recovered from the Defendant driver for a case like this? We also reminded them about the request for records about the ATE insurance policy.  

 Despite us chasing, rather than answering those questions about Irwin Mitchell again wrote direct to Scott

"I note the requests from Mr Carlisle on your behalf for information pertaining to the ATE premium charged and also the hourly rates and potential reductions to them. I am trying to obtain all the information he is seeking but unfortunately this has taken somewhat longer than I was expecting".

At the same time, they offered to waive the shortfall on recovered costs completely and reduce the success fee by £1,875.13.  

Scott, frustrated by the delay, agreed with some reluctance to accept this offer and duly received a refund of £1,875.13.