RECOVERING LEGAL COSTS
If you win in Litigation, find out if you are likely to recover your costs.
One question we often get when a client wants to sue another party is “will I recover my costs?”
That’s a great question and not always as straight forward as you might think, so let’s give you an insight into the recovery of costs in litigation.
The general rule is that the loser pays the winner’s costs
On this point, you need to make sure that you’re likely to win if you do start court proceedings, otherwise you could end up with a hefty bill from your opponent if they win! A good litigation lawyer will advise you on the likelihood of you winning once they have all the facts.
You also need to be aware of the Small Claims limit, which is currently £10,000. If you bring a civil claim, other than a personal injury claim, which is for less than £10,000, then other than court fees and some low-level fixed fees, you are not generally going to recover the costs you pay to your lawyer if you win. You need to take this into account and decide whether it is worth your while, especially if you have to pay anywhere from £1000 to £5000 in costs.
If your claim is over the Smalls Claims limit, the general rule is that the loser pays the winner’s costs. But don’t get excited because this doesn’t mean you will recover every single penny you have paid in costs.
Legal costs over £25,00o
In cases where the amount claimed is more than £25,000, the courts now use a cost budgeting exercise. Here the parties show how much they will need to spend for the various stages of the litigation through to trial. The court will then consider the costs for each party and place a cap on the amount that can be recovered for each stage. So even if you end up paying more than the cap, you are unlikely to recover the excess amount.
At the conclusion of a case, costs are either agreed between the parties or assessed by the court
The court has a wide discretion and when assessing costs there are three important matters that will be considered:
1. Whether the costs were reasonably incurred.
2. Whether the costs were proportionate to the matters in dispute. This often means the amount recovered. So, if you spend £10,000 and recover £2,000, questions will be asked!
3. The conduct of the parties during the litigation. In rare circumstances, a successful party may not be awarded their costs if their conduct during the litigation was found to be unreasonable. For example by refusing to consider mediation.
As a general rule, when calculating how much of your costs you are likely to get back if you are successful, if you aim for say 70%, you will not go that far wrong. So, if you spend £10,000 on legal fees, you should get back a minimum of £7,000.
You should also be aware that in certain circumstances, for example where individuals are on benefits or low income, court fees are not payable or they are reduced.
Lastly, once you have an order for costs, let’s hope that the other party pays up, otherwise you may have to take enforcement action to get paid!
In terms of how we approach costs in litigation cases, please take a look at our “Costs Page” HERE>.
To Find out ‘How We Work’ and what to expect when you contact us click HERE>
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