It cost the Icelandic government around GBP 500 (ISK 100,000) per hour to hire British law firm Ashurst to compile its report on Icesave.
It was also reported yesterday in Iceland that the Icelandic government had requested clarification from Michschon de Reya as to why its bill amounted to ISK 25 million following an initial estimate of ISK 2 million.
Michschon de Reya and Ashurst were both asked to prepare separate reports on Icesave for the Icelandic government last year.
RUV reports that the final cost was ten-times above the estimate and that the eventual ISK 100,000 per hour cost from both companies could suggest they colluded together to set a price.
legal partner rates are £300-750 per hour on London. Who actually thought that you would get a report for £20K? That is the cost of 2 senior managers in a big 4 accountancy practice (Outside London) for 2 weeks.
On the other hand, I do need a loan for a yatch I want to buy…..any takers?
Just curious as to what you will be buying? What is a new Yatch? Does it mean Watch? For your information You cannot quote a price and then suddenly change it to higher without good reason it is illegal.
Go on…………..have a referendum as to whether Iceland should pay these law firms…………………
If you’re going to pick on his spelling Ian, at least try to get it right (hint: a boat not a timepiece) Perhaps I should point out that an estimate is not a quote?
Meanwhile, anyone able to argue with Andrew’s sums (aside than to point out that they apparently thought they’d get a report for £10k, or 2 for £20k)?
ISK 2m = GBP 10,000. Something like this was always going to take more than a week, but let’s say it was budgeted at a week. Again unlikely, but say minimal overtime, so 40 hours.
That’s only £250 an hour! With no expenses! Is anyone in Iceland’s government/civil service able to budget?
And, anyway, it’s a false economy to cut costs on this. There should have been 3 firms engaged to submit detailed opinions back in June, as well as one or more commenting on the key points coming out of the negotiations as they happened. What’s the point of getting Mishcon to submit their opinion just before the December vote when it’s too late to fix the clause designed to solve the Ragnar Hall issue?
“You cannot quote a price and then suddenly change it to higher without good reason it is illegal.”
Its not illegal, it was an estimate and not a quote. Given that the subject was basically unknown it is probably impossible to do it for a fixed price.
lol. I wonder if Iceland got a “written quote” to do the work. I tend to doubt it.
Law firms charge by the hour. If the case being studied takes longer than estimated, you get billed for the whole lot.
Surely the Icelandic government realized that in a highly complex legal affair like this, the only ones who come out smiling are the lawyers? That’s why a quick and fair solution to Icesave is needed, to avoid spiralling legal costs.
english cheaters…an old story
The Red – Green government are just so incompetent at making contracts.
This is just another example.
( The incompetence is so much it does make my ears bleed. Not only from them but also from Guðbjartur Hannes ( chair man ) and Björn Valur Gíslason on the IceSave committee. )
In early stages of they ” negotation ” when our so very competient negotiator team led by Svarar Gests did want to get legal opinion, instead of finding good lawyer they did instead ask law firm of Schjødt of Norway. They did not have any inhouse expert it seem and so did sub contract that works to UK Ashurst firm
http://www.icenews.is/index.php/2010/01/12/lipietz-rejects-rejection-of-his-icesave-rejection/comment-page-1/#comment-110263
Main reason is that this firms are not doing most of work them selves but contacting it out to other lawyers and firms.
+Main reason for the cost is that this firms are not doing most of work them selves but contacting it out to other lawyers and firms.
Last time Mike UK Nordic analyst did make comments about how assets from frozen / bankcrupcy goes.
Now we finally do hear some facts about the money that was seized in Landsbanki UK branch as part of act under the UK Terrorist law :
” According to Morgunbladid’s sources, the total amount of these down payments is approaching ISK 200 billion (USD 1.6 billion, EUR 1.1 billion)—they have been deposited to the Bank of England account since the assets of Landsbanki in the UK were frozen in the fall of 2008.
Last June [ 2009 ], the freezing order was lifted, yet the deposits cannot be relocated because, according to British regulations, money owned by bankrupt estates in the UK cannot be transferred out of the country.
When asked why the down payments of Landsbanki’s loans are being deposited to an interest-free account at the Bank of England, a spokesperson for the resolution committee stated that they had only trusted the Bank of England to store the loan down payments and that the bank had not offered any interest rates. ”
http://www.icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=357653
I do find this response about lack of interest payment quite.. strange.
Fisy
“I do find this response about lack of interest payment quite.. strange.”
It is rather, however as the two countries are such good friends a special interest rate probably applies. Iceland expects a below market rate from the UK and the UK obliges.
One possible explanation is that they cannot use this money in any form – they cannot lend it out and make a profit for it or use it as capital to allow further lending. They are simple storing the money without the legal ability to use it in any way, so paying interest would be impossible, infact they would be within their rights to charge for the account.
“…final cost was ten-times above the estimate and that the eventual ISK 100,000 per hour cost from both companies could suggest they colluded together to set a price.”
I, Gummi, an outraged. My sensory organs weep. Our high standards are once gain being mocked. Enough, I say!
At a March referendum we the Icelandic people will decide how much (if any) of this extortion to pay. I predict the English will settle for 1 GBP per hour. If not – arbitration!
Afram island!
Gummi
Gummi said: “If not – arbitration!”
(Non-binding, of course.)
Afr.etc.
Gummi
So, each Icelandic citizen will pay 30p for their country to get the Michschon de Reya report. Less than half the price of a newspaper, that’s all. If cheaper advice is now more appropriate for Iceland, then why not use a Bangladesh law firm next time.
I look foerward to when he can post again to hear from Mike UK Nordic analyst about this EUR 1.1 billion monies sitting there in the bank of England, helping * no one at all *, except the balance sheet of HM Treausury.
And certainly not helping the * creditors * of Landsbanki’s estate.
Michschon de Reya are a good firm and good match for Slaughter and May ( representing HM UK Treausury ).
But already so much money was squandered on Schjødt of Norway and they contracting out the original opinoins to Ashurst which just was a complete waste of the money then.
I am not giving a criticism of the parliament asking for both opinions later, but the earlier foot stumbling incompetence of Svavar Gests and others.
Truly he should be ashamed.
http://www.thelawyer.com/iceland-crisis-what-ashurst-and-mishcon-advised/1003039.article
Althingi should not have been surprised that the hourly rate was around 500 GBP, since that is a quite typical rate for specialist UK law firms like Mishcon de Reya. This just shows how inexperienced they are dealing with matters like this.
What really matters is that the 86-page report analyses four very important legal questions for Iceland:
1. Legal advice on the contents and the terms of the Icesave agreement
2. Impact on the Icesave agreement being subject to English laws and jurisdiction
3. Impact on any potential future amendments or revisions to EU regulations on deposit guarantee schemes
4. Legal advice on legal repercussions if the Icesave agreement is voted down or delayed, and how best to handle any further negotiations.
The full report can be found here:
http://www.althingi.is/pdf/umsogn.php4?lthing=138&malnr=76&dbnr=835&nefnd=fl
This report should have been requested months ago. Considering we are debating whether to accept loan agreements totalling up to 4B Euros, a 120K GBP invoice for legal analysis is really not that significant.