Court Case – Who Pays the Legal Costs?

The cost of litigation is always a concern for clients.  As lawyers Cousins Business Law are often asked, “If I win my case, will I be able to recover the amount I have spent on legal fees?” The simple answer is, “You can usually expect the court to order your opponent to refund the majority of your costs, but not all of them, and there are no guarantees”.

The fact is that the law on what costs you can recover is very complicated – whole books have been written on it - and it is not unusual for there to be a lengthy hearing to decide on all the issues.

Track Options

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The first point to consider is how much your case is worth or, more precisely, what “track” the court allocates it to. Defended cases are allocated to one of three tracks (the small claims track, the fast track, and the multi-track) and different court procedures apply to each of them.

The rules on what costs you can recover if you win depend on the track. The small claims track is generally for cases worth less than £5,000 and you cannot expect to recover much more than the court fee. The fast track is generally for cases worth between £5,000 and £15,000 and the amount of costs that can be recovered are somewhat limited.

Even if your case is worth more than £15,000, you cannot expect to recover everything. The general rule is that the loser pays a contribution towards the winner’s costs. However, this rule is not always followed and it is within the discretion of the judge to make a different order – and they frequently do.

Applying During Proceedings

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Often you may make an application in the course of proceedings. For example, you may think the other party are hiding some documents which are important to your case. You therefore make an application to get the court to order your opponent to disclose them. If the judge disagrees with you and refuses to make the order, he will normally order you to make a contribution to your opponent’s costs in respect of that application and to do so within 14 days. This is regardless of whether you win or lose the case at the end of the day.

It is also usual for a court case to consist of a number of issues. If your case goes to trial and you win on some issues but lose on others, the court may reduce the costs you could otherwise recover by a percentage decided by the judge, even if you win overall.

Reasonable and Proportionate Costs

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Another principle that applies to costs is that you can only generally recover costs that are reasonable and proportionate. The usual way this works is as follows.

The court will first decide what is a proportionate amount of costs for your opponent to pay, which is mainly based on the value of the case, and how difficult it is. A general rule of thumb is that it is proportionate for the costs to equal the value of the case. Generally speaking, the smaller the value of a case, the greater the amount of costs that would be proportionate. But remember that this is not always the case.

The judge will then go through everything that was done in your case and decide, up to the amount he considers proportionate, whether it is reasonable for your opponent to refund those costs and, if so, what a reasonable amount for them to pay towards them would be.

If costs exceed the amount the judge considers to be proportionate, then he will go through these extra costs and only order your opponent to reimburse those items he considers were necessary and only allow a reasonable amount for them.

Increases and Reductions in Costs

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The court may also increase or reduce the amount your opponent is ordered to pay you for a number of other reasons, such as:

• the conduct of each party towards the dispute before the proceedings were started,
  
  
• the way they conducted the proceedings,
  
  
• the efforts made to settle the case,
  
  
• the importance of the case to the parties,
  
  
• the complexity of the case and/or whether it involved particular skill, effort or specialised knowledge and the place or circumstances where the work was done.

Take Advice

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You can see therefore that the question of how much of your costs you can recover is very complicated and has a bearing on the way a case is handled right from the outset. It is important to find a solicitor who understands all the factors that can influence the amount of costs you can recover and conducts your case with this in mind. This is especially important when you realise that it is not uncommon, especially in smaller cases, for legal costs to equal or even exceed the value of the case itself – you want to ensure that you are likely to recover as much of those costs as you possibly can. If you are involved in a dispute and would like specialist advice contact Gary Cousins at Cousins Business Law on 0121 778 3212.

Contact Cousins Business Law for advice on this topic.

For free advice on this topic please call us on 0845 003 5639.