The collapse of the BCCI creditors’ case against the Bank of England in 2005 was the most expensive trial in the history of the English courts, with legal fees exceeding £110m. However, while such extreme examples highlight the significant levels to which legal costs can rise, an increasing and very real concern is that the costs of litigating a dispute will be significantly disproportionate relative to the claim. But to what extent is this a concern among the UK’s leading companies, and does it affect their litigation strategy or the value they receive from external advisers?
A recent Ipsos MORI survey of senior personnel in the FTSE 350 with responsibility for litigation budgets, commissioned by Addleshaw Goddard, found 76% of respondents ranked litigation costs as their foremost concern when a commercial dispute arises. Costs are a greater concern than the outcome of the dispute, the impact on brand or reputation and the effect on share price. It is not surprising, therefore, that the costs incurred on the whole case were cited more than anything else as the determining factor as to whether or not litigation should or should not be pursued at all. This was closely followed by the amount of costs that would have to be paid if the litigation was not successful.
