Written by Michael Coyle on 14 May 2008« Return to Reading Room
I am often asked to explain or justify legal costs in relation to litigation in the High Court. Mr Justice Floyd has recently provided an interesting Judgement. It is a must read.
The Judgement was handed down on 28th February 2008.
The most interesting paragraph is reads as follows:
This case was not a particularly heavy patent action. There was no disclosure, and the technology was not of the most complex kind. The trial itself only lasted about 5 days.
How is it that one side (RIM) can have outspent its opponent (Visto) in the same action by a factor of 4 or 5 to 1? I should say straight away that there cannot be the slightest suggestion that Visto's advisors have adopted an unduly parsimonious approach. Visto employed well known specialist city solicitors, and an expert witness of a very high calibre. Their witness statements and expert reports were thoroughly and conscientiously prepared; and Visto employed highly distinguished specialist leading and junior counsel. So we know that it was possible to run one side of this case through to the end of the trial for an expenditure of Visto's order without cutting any corners. Mr Moss, Visto's solicitor, says in his witness statement that he would expect his firm, which is a City firm, to be at the upper end of the charging spectrum for work of this kind. Yet, as he points out, RIM's solicitors profit costs were £5.18 million as compared with his firm's profit costs of £1 million. So the disparity, on that aas is 5 to 1. One must also bear in mind that Visto's costs may be assessed down significantly as well.
I have been shown a costs breakdown prepared on behalf of RIM. Over the 15 months between claim form and trial one partner, three senior associates and three associates have been involved as well as an unspecified number of trainees and paralegals.
I have to say that the breakdown reveals some really shocking statistics. One of the senior associates has spent 2252 hours on this case in the course of 15 months. Another associate has spent 2291 hours. These hours each represent the best part of the working day for the whole 15 month period, assuming a 35 hour week. For just these two associates, the charges amount to nearly £2 million. For these sums of money one would be entitled to expect each of them to be able to recite all the documents in the case by heart.
The single partner has spent 1387 hours on the case. The remaining associates have spent 3500 hours or so between them. Perhaps most surprising of all is that another £1 million odd has gone on trainees and paralegals. They have spent over 5000 hours on the case. I was told they had been reading the results of prior art searches. This is surprising given that the prior art cited in this case was high profile material from Lotus Notes and Microsoft. A version of Lotus Notes had been relied on in the United States before this action started.
If one adds up all the hours spent by RIM's solicitors, one finds that some 9 man years have been spent over 15 months. All for a trial with no disclosure which lasted about 5 days.
The picture summoned up by this bill of costs is one which is totally unfamiliar to anyone who has been involved in economically conducted patent litigation. Ms. Dagg, the partner at Allen & Overy with conduct of the case seeks to explain these high levels of costs by reference to the fact that the present dispute forms part of a global battle between RIM and Visto. In paragraph 23 of her witness statement she says:
"The press releases attached to the Particulars of Claim … make it clear that Visto's overall goal was to shut down RIM's Blackberry system entirely. Therefore, although it might be thought that this action was not particularly commercially important to RIM (the alleged infringement being the little used and now discontinued Mail Connector), it was an important part of a much larger global battle. Obtaining a timely decision of this Court on the validity of the 905 Patent was important for RIM in this overall battle"
I have to say that I have great difficulty with the logic of this paragraph.
What were the legal costs?
Blackberry spent £5.2 million on solicitors fees.
Visto spent £1 million.
Blackberry instructed Allen Overy http://www.allenovery.com.
Visto instructed http://www.taylorwessing.com.
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