Taylor Wessing

Recovering internal management and staff costs for time spent on investigating or mitigating damage caused by a wrongdoer and preparing for subsequent litigation

Summary

	The Court of Appeal has confirmed that the cost of internal management and staff time spent on investigating and rectifying the effects of damage caused by a wrongdoer can be recovered.
	There is no need to demonstrate that the company has suffered loss of profit or other losses by diverting staff time in this way.
	In order to recoup such costs in subsequent litigation, you must have sufficient records to show what time has been spent by employees on investigating the consequences of an actionable claim and that this time was directly attributable to investigating and remedying any damage that occurred.
	Ordinarily, you will have to demonstrate that the time spent in this way caused your employees to be substantially diverted from their usual activities, which significantly disrupted your business.
	Your claim for the recovery of internal management and staff costs incurred that relate to investigating and mitigating harm will be a claim for damages. If you cannot prove the cost of the wasted time in relation to the extra work done, then the claim may be restricted to nominal damages.
	Preparatory work carried out by your employees in support of litigation itself, e.g. identifying relevant evidence may also be recoverable as costs of the action to be assessed.

What you should do now

	Record all time spent by employees in dealing with the consequences of an actionable claim.
	Keep records to show why employees were diverted from their usual role and timesheets and/or diary entries. The latter should identify each employee, the time they spent away from their normal activities and the type of work that they were required to undertake to investigate or mitigate any damage or prepare for subsequent litigation.