Fees and File Foes Fun

March 4, 2010

I read today that Tilley, Bailey Irvine (tbi) have, according to Which?, sent out many letters making accusations of illegal file sharing. The letters threaten legal action unless recipients’ agree to £700 in compensation. Recipients are allegedly accused of file-sharing pornographic material copyrighted by Golden Eye (International) Limited. tbi wil join ACS:Law as the targets for abuse – ACS have been carrying on the same sort of volume litigation for months. This news comes just days after the Solicitors Regulation Authority referred a complaint about earlier volume litigation proceedings against alleged file-sharers to the Solicitors Disciplinary Tribunal.
So it is no surprise with all this going on that Andrew Murray’s piece, Volume Litigation: More Harmful than Helpful?, which is tucked away at the back of the current issue of the magazine, continues to be one of the most read articles on the web site. I confess that one of the things that bemused me and interested me when reading Andrew’s piece, albeit only after a sharp nudge in the right direction from a colleague, was costs and how they were calculated.
Speaking as one whose expertise on costs is limited, I hesitate to say much. But the basic principle is that you can only claim the costs actually incurred. Isn’t that the indemnity principle? But the costs actually incurred in an action against file-sharer Joe Bloggs are not the overall costs, they are the costs attributable to the action against Joe. If Joe pays up promptly, he cannot be responsible for the costs of chasing Tom, Dick and Harry who don’t – and still less is he liable to pay anything for the costs attributable to work in chasing Emma, Sally and Vicky, each of whom promptly demonstrates that she has no liability.
All the volume litigation letters are described as demanding a sum by way of compensation and costs. But how do they determine what the costs are?
If they divide the cost of all the work by the number of potential defendants and only succeed in getting 50% to pay then they will only get half allowable costs. That shouldn’t be profitable, although there is nothing to stop the client forking out the rest. Catch is that the client isn’t left with much compensation, if any, although the client may see the prevnetion of further illegal activity as the main aim.
On the other hand, the claimed costs cannot be based on some calculation which assumes that only a perentage will pay. If they were, the indemnity principle would be breached. Because, if Joe, Tom, Dick and Harry, and even Emma, Sally and Vicky, all pay promptly, you will recover more in costs than you have actually expended on the case. I don’t think that’s allowed. There can be no question of success fee or conditional fee arrangements, where it is allowed, because you have to give notice for that.
I look forward to being enlightened by those who really understand the issues.
In the meantime, the tbi development must be especially worrying for infringers. The firm has an office in Hartlepool – a town chiefly famous for hanging monkeys. Heaven knows what they will do to illegal file-sharers.