Litigation Costs: what you need to know
General rules and principles – when you instruct us, you are responsible for our fees and disbursements (e.g. court fees and others we might engage to help with your case such as barristers and experts) plus VAT. We will provide you with information about how our fees are calculated, hourly rates and estimates for the work you wish us to do.
We will ask for authority to engage others and provide the best information we can on anticipated fees and expenses.
When we instruct barristers, their fees are due on delivery of the instruction. If the instruction relates to a hearing, then this is known as a “brief fee”. That fee is payable even if the hearing does not go ahead – if it is adjourned, cancelled or the case settles.
The responsibility for our fees, disbursements and VAT remains regardless of any litigation costs you may be entitled to recover from your opponents in any form of claim in the Tribunals or the Courts.
The ordinary rule in Tribunals and the Employment Appeals Tribunal is that no costs will be ordered to be paid by either party. There are exceptions which we will discuss if the need arises.
In civil claims in the County Court or High or Supreme Courts, costs may be awarded. It is entirely within the discretion of the court and the Judge who deals with the matter. Obviously, the losing party would not usually get any costs allowed and even a successful party can have certain costs disallowed if there has been failure to follow procedural steps imposed by the court under CPR (Civil Procedure Rules) or protocols that apply to the particular type of dispute or claim.
Costs can be assessed immediately at the end of a matter or there can be a subsequent agreement of the costs amount or consideration known as “detailed assessment” (see below).
If your matter is in the Small Claims Track (a claim with a value under £10,000) costs will not usually be awarded. You will still have to pay us and will recover none of these costs.
If the matter is in the Fast Track (a claim up to £25,000) costs can be awarded, but there may only be fixed amounts recoverable. You will still have to pay us, but may recover some of these costs.
In the Multi Track (where the value is high or the court otherwise thinks the matter needs to be considered by a more senior Judge) full costs can be awarded. You will still have to pay us, but should recover some of these costs.
We cannot guarantee these results or outcomes though. It has to be remembered of course that even if your opponent is ordered to pay, they may not do so or simply do not have the resources to do so. Despite this you remain liable to us.
Detailed assessment process
This begins with the party entitled to costs submitting a bill of costs to the paying party and the court. The paying party will then make observations about the bill and the process ends with a hearing at which a costs judge determines the final amount of costs to be paid. The costs can be settled at any stage to avoid the matter having to go to a hearing. Sometimes a hearing is not required and the court will consider what should be allowed based on paperwork only – there is a right of appeal if this is done.
At the detailed assessment hearing, the costs judge will assess costs on what is referred to as either the “standard” or “indemnity” basis. If costs are awarded on the standard basis the costs judge will only allow costs to be recovered that are proportionate and either reasonably incurred or reasonable in amount. This is the basis on which most costs orders are made. This basis will generally result in lower hourly rates agreed between clients and their solicitors.
If costs are awarded on the indemnity basis, the costs judge will only allow costs to be recovered that are either reasonably incurred or reasonable in amount. There is no requirement for the costs to have been proportionate. This puts the onus on the paying party to show that the costs claimed are unreasonable and means that you are more likely to obtain a higher recovery of your costs than on the standard basis. However, it is rare to get an order for costs on the indemnity basis.
Other factors that will be taken into account on assessment by the costs judge include:
- The complexity and importance of the matter.
- The time spent, skill involved and location of the work.
- The hourly rates of the solicitors involved and the amount of disbursements (for example, counsel or expert fees).
- Any previous estimates of costs that have been produced by the parties during the various stages of litigation.
- Any misconduct of the parties.
- Funding by a conditional fee agreement with a success fee or legal expenses insurance.
This summary of matters considered at an assessment apply equally well to any consideration of costs – it must be shown in making any claim for costs that behaviour has been reasonable and steps taken have been proportionate.
The option to settle costs will be available to the parties even during the course of the detailed assessment process, and it can be done by making a written offer to settle. If settlement is not reached, any offer to settle will be taken into account by the court when deciding who should pay the costs of the detailed assessment proceedings.
In more complicated cases or those with high value the court will insist on each side preparing budgets for the costs of the case. We may need to involve you in this.
The idea here is to encourage both parties to consider whether it is going to be proportionate to proceed, the likely litigation costs of their own lawyers and the risks of paying those and the costs of the opposing parties lawyers too.
We will have given you advice on the likely litigation costs in advance of this document being prepared, but the amounts set out starkly on paper can often be shocking and a good incentive to look at possible settlement solutions instead of running the case onwards possibly to a full trial.
Read about Disclosure of Documents
Read about Limitation
SO Legal Solicitors Eastbourne – 01323 407555
SO Legal Solicitors Brighton & Hove – 01273 069920
SO Legal Solicitors Uckfield – 01825 729840
SO Legal Solicitors Notting Hill – 0203 9677700