There is a consensus now that the quality of adjudication is fine, but the same cannot be said about the cost of hiring an adjudicator. Just ask the clients that got a bill from one chap for £30,000
It is probably something to do with lack of sunlight but I’m upset. My complaint is aimed at adjudicators.
They (we) are a diverse lot. There are surveyors, engineers, architects, lawyers – all sorts. We started adjudicating nearly 10 years ago, and we have learned lots of lessons along the way. All those who appear in the lists of adjudicator nominating bodies such as the RICS or the Technology and Construction Solicitors’ Association have been trained and examined. The RICS panellists have been through reassessment processes. It was rigorous and thorough, with an examination of past decisions and detailed probing before a tribunal.
With the occasional exception, the quality of decisions does not seem to be a serious problem. Were it otherwise, the courts would be much less supportive and adjudication would not be accepted as a reliable dispute resolution process.
The problem is not the quality of the decision, but the cost. Adjudicators charge by the hour. There are therefore two elements making up the charge – the rate per hour and the number of hours spent.
When a nominating body appoints an adjudicator at the request of one of the parties it does not enquire into the adjudicator’s charging rate or the likely fee. The adjudicator is therefore entitled to charge a reasonable sum. What is reasonable? Neither the Construction Act nor the Scheme for Construction Contracts gives any rules or even guidance. The adjudicator’s normal rate for their other professional work is normally taken as the basis, although there are real arguments that the rate should be higher (because of the urgency of the work) or lower (because it involves fewer overheads). Some surveyors in small practices outside London may charge about £125 per hour. Some solicitors in City of London practices will charge £400 or more.
The nominating bodies can and should monitor fees. Those charging fees that are not reasonable would not expect to
In a recent adjudication (no names given) a City lawyer adjudicator was asked to sort out a dispute that involved some interesting law but restricted facts and no delay analysis or quantum. He produced a thorough analysis that had clearly taken many hours of hard work. The decision ran to many pages and dealt in detail with numerous authorities. The charging rate was £350 an hour. The fee approached £30,000, but the parties probably expected it to cost no more than a quarter of that sum. Most people working in the world of adjudication have similar tales to tell.
The rate is just the start. Some adjudicators seem to spend every waking hour (and possibly some somnolent ones) for 28 days working on the case. Others will get straight to the issue and decide it in a tiny fraction of that time. On that basis, £125 an hour may be expensive or £400 hour much more economic.
What is to be done about it? It is unrealistic to expect adjudicators to give a fixed fee except in the simplest of cases. If a party refuses to pay and the matter comes to a court, it would be only in exceptional circumstances that the court would consider it appropriate to cut the fee of an adjudicator who has charged his normal rate for the hours recorded.
The nominating bodies, however, can and should monitor fees. If adjudicators were required to report to them with brief details of the nature of the dispute, the amount in dispute and the fee charged, they could put themselves in a position to assess whether a fee was reasonable or not. They could work in co-operation with each other to maximise the data available. Adjudicators who charge fees that are not reasonable would not expect to receive appointments.
No offence to the nominating bodies, but it is usually preferable to agree the name of the adjudicator with the other party before starting the process, thus avoiding the appointment fee and securing the services of an adjudicator that both sides trust. That trust should include confidence that the adjudicator will deal with the case efficiently. The hourly rate will be agreed in advance, but the only way that you will have confidence about the likely number of hours is by past experience, either your own or that of others who will tell you. You should do your best to find out.
John Redmond is head of construction at solicitor Osborne Clarke in Bristol