Legal advice is a service, and as with any professional service provider, it needs to be paid for if a party finds itself in court proceedings. Unfortunately, unlike other service providers, we cannot guarantee an outcome, rather can only get you through the process properly advised and properly prepared.
The outcome, however, whether you win, lose or draw, will have a huge impact on the proportion of costs and disbursements which may be recoverable from the opponent.
1. Will I get all of my legal costs back if I win?
The level of legal costs you recover if you are successful will depend on several factors, some of which are set out at number two below. As a general rule of thumb, you should recover 65–70 per cent of your legal costs from the other side, if you are successful.
2. What will impact on the level of costs awarded?
The first thing to consider when discussing recovery of legal costs is the track a matter has been allocated to. There are three “tracks” within litigation; Small Claims, Fast Track and Multi Track.
If your claim is less than £10,000, generally you will be allocated to the Small Claims track. If this happens, your costs recovery is generally restricted to a fixed commencement cost affected by the value of the claim, and the court fee. In special circumstances, where the other party has behaved unreasonably, you may be able to recover some additional legal costs.
Costs recovery in the Fast Track and Multi Track is not restricted in the same way as the Small Claims track, but the costs of a solicitor attending at trial for a Fast Track dispute are fixed to a specific amount, set out in the court rules by reference to the value of the claim.
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There are numerous other factors which the court will consider when assessing costs. These will include the time the assessment is made (i.e. whether it is at the end of the litigation or following specific individual applications), the complexity of the matter, the value of the matter and whether the costs incurred are proportionate and whether any offers have been made.
3. Can I take steps to try to increase the costs awarded to me?
As with all litigation, there are tactical and practical steps you can take which may improve your position. With costs, these generally take the form of without prejudice settlement offers, specifically offers made under Part 36 of the Civil Procedure Rules, and partaking in other Alternative Dispute Resolution options.
If you are unsure as to what options you have as to costs protection, you should seek legal advice. Practically, you could set intervals for updates on your claim rather than contacting your solicitor on a regular basis, as regular telephone calls to your solicitor will increase costs. You could also set out a detailed chronology of events and history in your own words and make sure that any papers are delivered to your solicitor in a chronological and orderly fashion to avoid time being spent by your solicitor in organising these papers and incurring the associated costs.
4. What happens if I am unsuccessful? Could I still recover my costs?
If you lose, you are unlikely to recover any of your costs, and you will likely be responsible for a large proportion of the other side’s costs. You can take steps to protect your liability to pay costs. One of these ways is to make an early part 36 offer.
If you make a part 36 offer early in proceedings, and the other side wins but does not do better than what you had offered, then you will likely recover some of your costs under the part 36 provisions.
Another way of protecting the position on costs is to invite the other party to mediate the dispute, i.e. to attempt to resolve the issues by embarking on the informal and “without prejudice” process of instructing an independent third party to assist in resolving the issue in dispute. If a party refuses to mediate, the court can impose cost sanctions even if the party is successful overall.
You may wish to seek legal advice to consider these options further.
5. Can I protect myself from the other side’s costs?
One option to protect yourself from the other side’s costs is to take out insurance known as After The Event insurance. This is insurance taken out once litigation has commenced which insures you against the risk of paying your opponent’s legal costs should you be unsuccessful. The premiums associated with such insurance products are not recoverable from the other side. If you wish to enquire as to whether or not your claim is appropriate for this approach, do please contact us.
Within litigation, legal costs can be a huge burden and will undoubtedly impact on the parties at the outcome of the dispute. Irrespective of whether or not you are successful, in normal cases you will be liable for the legal costs of your solicitor. You may be able to recover some or most of these costs from your opponent if you are successful.
Matthew Goodwin is a commercial litigation solicitor at Wright Hassall.
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