Costs Law: What is Costs Law?

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What is Costs Law?

This is a specialist area in law that deals with each parties’ costs after the conclusion of a case. The general rule of thumb in costs law is that the loser pays the winner’s costs. There can be exceptions to this, for example, where an adverse costs order has been made, or when there has been unreasonable conduct, or the ‘winner’ has not necessarily been successful on some of the issues.

The party that is entitled to recover their costs (the receiving party) will be entitled to recover their own fees, usually at an hourly rate and any disbursements incurred by way of detailed assessment. Depending on the value and complexity of the case, costs may be capped or fixed under the Civil Procedure Rules.


What Areas of Law Does Costs Law Impact?

Costs Law comes into play in almost all areas of law, from civil litigation to immigration law.  Legal representation needs to be funded, and therefore such costs are usually recoverable as part of litigation, whether it be inter-partes or as part of Legal Aid.

What is the Meaning of Legal Costs?

Legal costs are all the fees a client incurs in obtaining legal representation.  The main categories include their Solicitor’s (or as a Litigant in Person, their own) profit costs, VAT thereon, disbursements and Counsel fees.


What is the Costs Law Process?

The costs law process begins when an order or the terms of a settlement gives rise to a costs award. Once this is in place, a Bill of Costs will be prepared by the receiving party and served on the paying party. Where the main claim has not been issued in the Court prior to settlement being reached, then costs will try to follow the same path and agreement on costs will be attempted on an informal basis. If an agreement cannot be reached by the parties, then costs only proceedings can be issued, which allows for more efficient handling of costs cases as it provides Court deadlines and a Court process to follow.

When the matter is issued with a Court, then a formal Bill of Costs will be served with a Notice of Commencement. Within this Notice, a deadline will be given for the paying party to provide written submissions of their issues taken with the Bill of Costs, known as Points of Dispute. The receiving party will then have usually 21 days to reply to these points.

Should settlement not be reached after the formal replies are served, the matter will be sent to the Court either for a paper assessment (provisional assessment), where the bill amounts to £75,000 or less, or a detailed assessment, for bills over £75,000, where attendance is usually required in person.

Throughout the whole costs process, it is important to continue negotiations with the opponent in order to try and reach an agreement without proceeding through the Court, which results in further costs of assessment being incurred.

How are Costs Assessed?

There are different tests that can be applied to costs, but the main aim for the Court is to ensure costs are reasonable and proportionate. The different types of basis for assessment include the Standard Basis and Indemnity Basis. It is important for the Court to ensure the costs claimed and awarded are proportionate to the claim which was brought.

How Can ARC Costs Assist?

ARC Costs are specialist Costs Lawyers and Costs Draftsmen practising in different areas of legal costs, with our registered office being in England & Wales.

We act for both receiving and paying parties, and assist clients with bringing or disputing a costs claim. As Costs Lawyers, we can assist with issuing costs only proceedings and representing you at Costs & Case Management Conferences (CCMCs) as well as through the detailed assessment process. 

Should you require any further information on costs or wish to discuss your query with us, you may contact us on 01204 397302 or Alternatively, you are welcome to complete our online query form, and we will contact you.

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