Commercial Litigation Costs and Recovery of the Same

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What are Commercial Litigation Costs?


Commercial Litigation Costs arise from matters relating to commercial disputes in which costs have been ordered or an offer has been accepted which permits the recovery of costs. Commercial disputes involve contractual disputes between a business and a client or a supplier. There are a number of expenses that can arise in commercial litigation, including Court fees, Counsel and expert fees, as well as a claim being made for Solicitor’s profit costs.


Commercial Litigation Costs: Who Pays?


The general rule on costs is that the losing party pays the winning party’s costs; however, the Court can apply their discretion in making an alternative cost order in litigation. Should there be express costs awards stated within the damages settlement, then this will usually apply to the case, for example, if the main action was to be settled by way of Part 36 Offer.

The Court applies its discretion in making a Costs Order and will usually consider the following factors when assessing how costs are to be awarded:

  • Conduct of the case before and during proceedings.
  • The reasonableness of the issues raised.
  • The way in which the issues in the case have been presented or defended.
  • Whether the successful party has exaggerated their claim.


How Much Will the Paying Party be Required to Pay?

Law firms will usually charge on an hourly rates basis for the work they have undertaken for their client. As their client, you will be required to pay for these invoices. This requirement will also depend on the type of agreement in place between you (the client) and the Solicitor. If you have been issued with interim invoices, your recovery may be capped in line with those invoices, or at any percentage of damages if a Damages Based Agreement has been entered into.

The amount that you will be required to pay will vary based on the facts and complexity of the case. If you are successful and you are awarded costs in your favour (ordering the other party to pay your costs), it will then be a matter of determining the amount of costs you can recover.

Should you not be able to reach an agreement with the paying party on the amount of costs to be paid, it will fall on the Court to assess the level of costs which you will be entitled to. A court assessment on costs can be on the standard basis or the indemnity basis. Determining which basis your costs are assessed, will depend on how much costs you will be entitled to recover. Standard basis is the default means on which costs will be assessed, unless otherwise ordered by the Court.

Only in very minimal cases will fixed costs apply. These types of cases include residential possession and debt claims which are not defended.

As stated above, commercial litigation costs and any award is widely up to the Court’s discretion, and given the uncertainty of the award or the amount likely to be recovered; it is always important to consider Alternative Dispute Resolution (ADR) prior to commencing litigation or proceeding to Trial. It is advisable to seek legal costs advice on different methods of concluding your commercial dispute outside of the Court and without the need for litigation to minimise the level of commercial litigation costs which you may be required to pay.


 Negotiating Commercial Litigation Costs


If you are the successful party to a commercial dispute, it is likely that you will be entitled to recover all or some of your legal costs incurred. In this case, a Bill of Costs will need to be prepared and submitted to the paying party to recover your legal costs and disbursements. The paying party may wish to negotiate costs by serving their points of dispute, which you can further negotiate using points of reply. If an agreement cannot be reached, parties may proceed to detailed assessment hearing to have their costs assessed by a Judge.


How Can ARC Costs Assist?


ARC Costs are highly experienced in advising and assisting with costs issues and disputes in different areas of law. As Costs Draftsman and Costs Lawyers, we can assist in your Commercial Litigation Costs issues.

If a costs award has been made, allowing you to recover costs from your opponent, we can assist with preparing a Bill of Costs on your behalf to ensure maximum recoverability. We can also assist in Costs Negotiations and represent you at detailed assessment proceedings which can determine the amount of costs you may be able to recover.

If you have been ordered to pay costs to your opponent, we can assist in disputing costs which may be sought and which you may deem to be excessive and unreasonable. We can do this by way of preparation of  Points of Dispute and also through negotiations to ensure you will only pay for costs which are reasonably incurred and not exaggerated.

Should you wish to discuss your costs query with us, please contact us on 01204 397302 or via email at Alternatively, you can complete our online query form and we will contact you to discuss your query further. We can provide expert legal advice on costs in our free, no obligation initial consultation.

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