What is Costs Litigation?

Costs litigation is the process of setting/determining the amount of costs owed by one party to another following any type of legal action. The general rule of thumb in costs is that the losing party pays costs to the winning party following payment of any damages awarded or relief directed by the Court. Costs litigation will help the parties to determine exactly how much the winning party (receiving party) should receive from the losing party (paying party).

What Happens During Costs Litigation?

Legal costs are litigated through the process of Detailed Assessment. The first step within this process is to draft a Bill of Costs. Subsequent to this, legal costs negotiations can commence through use of Points of Dispute and Points of Reply. Points of Dispute should be served on the paying party within 21 days of receipt of the Bill of Costs if they do not agree with all costs listed within the bill. Replies to the Points of Dispute should be sent following this.

The parties should make efforts to settle the matter out of Court; although, an assessment hearing can be applied for if an agreement cannot be reached.

Many costs professionals would suggest alternative settlement methods prior to proceeding to Court, such as Alternative Dispute Resolution (ADR). This is because they can be much more cost and time-effective, as it means that no hearing fees or further Court fees are incurred. If this method is not successful, then two types of assessment hearings can take place.

Firstly, a Provisional Assessment hearing can be completed. This type of hearing can be done on paper and is used for Bill of Costs valued at £75,000 or less. Alternatively, a Detailed Assessment hearing can take place. This type of hearing is required for cases where the Bill of Costs is in excess of £75,000 by default, or in any other matter ordered by the Court. Both parties are required to attend a Detailed Assessment hearing. At either type of hearing, the case will be examined and the amount of costs owed determined by the Court, and the matter will be finalised when the losing party pays the winner.

Is a Costs Budget Required?

Depending on the complexity and value of the matter, the Court may allocate a case to the Multi-track. If this takes place, Cost Budgets will be required during the main litigation itself, so as to determine amounts that should be recoverable in any subsequent costs litigation. This document, formally known as the Precedent H, sets out the costs incurred up to the first Costs Management Order and the future budgeted costs, which are those incurred after the date of the first Costs Management Order.

Updates were made to Practice Direction 3E, the guideline for Costs Budgets, in October 2019. Therein incurred and budgeted costs were further defined, and the transition date between the two set as the date of the first CCMC.  It was also stated therein that the fees for a trial brief would now be placed in the “Trial Preparation” phase rather than the “Trial” phase, where it was placed previously. This is an important change for costs professionals as sanctions may be imposed if the brief fee is not placed in the correct phase.

When conducting any type of legal case, it may be useful to utilize the skills of Costs Lawyer regulated by the Costs Lawyers Standards Board (CLSB).  This regulation is akin to that held by a Solicitor who is authorised and regulated by the Solicitors Regulation Authority.  An accredited Costs Lawyer will ensure any Costs Budget produced is legally compliant and maximises the potential recoverability of costs on conclusion of a case.

Who Can Conduct Costs Litigation?

Costs litigation can be conducted by various types of regulated individuals including Solicitors and Legal Executives. Costs Draftsmen can complete costs litigation on the behalf of such regulated individuals, and can prepare Bills of Costs and other documents, alongside providing legal advice on costs.  Costs Draftsmen are not however, individually regulated.

Costs Lawyers as regulated individuals are able to conduct costs litigation and hold rights of audience to provide representation at Court.  Costs Lawyers are the only branch of the legal industry with expert knowledge of costs law and are therefore best placed, alongside Costs Counsel, to advise on any legal costs disputes.  Costs Lawyers can also accept direct instruction from Litigants in Person to act on their behalf to recover/contest costs.

How Can ARC Costs Assist with Costs Litigation?

The expert team of Costs Draftsmen and Costs Lawyers at ARC Costs are very experienced with handling costs litigation and providing legal advice for dispute resolution.

The skilled team can prepare thorough  Costs Budgets and Bills of Costs, alongside other documents such as Points of Dispute and Replies to Points of Dispute as/when they are required. Once negotiations have commenced, the negotiators on our team can assist with settlement of the matter. They aim to settle matters outside of Court, as this is most cost and time effective for the client however, we can employ our experience if the costs litigation requires an assessment hearing to obtain the most favourable result.

Our Costs Lawyers are regulated by the Costs Lawyer Standards Board, a regulator who represent Costs Lawyers registered in England and Wales. Furthermore, they are part of the Association of Costs Lawyers representative body. Both ensure high standards are maintained by our legal professionals, and that we continue to provide a beneficial service to all of our clients.

To find out more about how we can assist you with any costs litigation please, contact one of our experts via phone on 01204 397302 or email the team at info@arccosts.co.uk. Alternatively, please utilize the free chat facility on our website to connect with one of our professionals.

Postal instructions can also be sent to our registered office at 4 Bark Street East, Bolton, BL1 2BQ.

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