aGenerally, the Courts in England and Wales will allow costs recovery by way of ordering the losing party in litigation to reimburse the winning party for the legal costs they have incurred in making their claim.

What Type of Legal Expenses can be Recovered?

The rules and guidelines set out in the Civil Procedure Rules state that the unsuccessful party is responsible for paying the successful party’s costs and disbursements. Legal costs and expenses can include the following:

·  Solicitor’s fees for their time spent working on the case, calculated on hourly rates and time spent on other activities such as producing documents;

·  Expert fees for providing CPR 35 compliant expert reports in litigation;

·  Court fees which are payable in order to issue a claim/application, and to proceed to Trial, and;

.  Counsel fees for providing advice throughout litigation, and conducting advocacy at any hearing or Trial.

What Allows Costs Recovery to Take Place?

The first requirement of recovering legal costs is to obtain a costs order which will allow you to proceed to detailed assessment. A costs order is usually made via Consent/Tomlin Order, or at any final Court hearing, and a deemed costs order is made following the acceptance of a Part 36 Offer.

However, both parties have the option to come to a mutual agreement regarding costs when settlement offers have been made, before asking the Court to make an order.

The Process of Detailed Assessment for Costs Recovery

The cost recovery process is completed using the detailed assessment technical procedure. It gives the winning party an opportunity to draft and submit a lengthy, detailed Bill of Costs which will be served upon the paying party alongside a Notice of Commencement.

According to CPR 47.9, the paying party should effect service of their Points of Dispute within 21 days of receiving the Bill of Costs. This means they can counter argue with any disputes as to the level of costs claimed. Otherwise, if Points of Dispute are not sent within 21 days, the receiving party can apply for a default costs certificate to the Court to recover their costs in full.

After the receiving party receives the Points of Dispute, they are entitled to raise Points of Reply within 21 days. These will need to be served only if the receiving party do not agree with the Points of Dispute or if nothing is to be further gained by serving the Replies, as they are optional. 

Both parties should attempt to negotiate and reach a mutual agreement to settle the costs. If a deal cannot be reached, the receiving party should initiate Court proceedings within 3 months by serving the Bill of Costs with a Notice of Commencement to commence the detailed assessment process.  After a further 3 month period, if agreement cannot be reached still following exchange of Points and Replies, the receiving party should apply for a Provisional/Detailed assessment hearing.

Thereafter, a judge will conduct an assessment on how much the losing party should pay to the winning party.

If the paying party cannot pay their legal costs or cannot afford to do so, the receiving party may need to take enforcement action, resulting in more costs being incurred.  Success in recovery of these costs will depend upon the solvency of the paying party, and deciding on the appropriate enforcement action to take.

What is a Bill of Costs?

Bill of Costs detail the full cost recovery claim on an item by item basis, listing all incurred items such as records describing the dates and extent of work carried out by the solicitor or litigant in person, and details of disbursement vouchers and counsel fees. It is important to note that these costs should be reasonable, proportionate and should include recoverable items only.  Failure to follow the correct procedures set out in CPR 47, or for any excessive costs claim, may result in sanctions on assessment/disallowance of the bill drafting and checking time.

Serious breaches (such as a breach of the indemnity principle and or misleading costs claims) can lead to allegations of misconduct, which can have regulatory consequences.

How can ARC Costs Assist with Costs Recovery?

ARC Costs are a highly experienced team of Costs Lawyers and Costs Draftsmen. We have a high success rate of costs recovery in all fields of work, and generally conclude matters via Alternative Dispute Resolution where possible to ensure costs negotiations are conducted efficiently and cost-effectively. We can assist in recovering legal costs by drafting your bill of costs, as well as Points of Reply and negotiating your bill of costs with the other side before advising on whether the claim should proceed to a Detailed Assessment Hearing.

As independent costs experts, we can alternatively be instructed by the paying party to settle Points of Dispute and to minimise the costs claim be made against them.

If you have a legal costs query, we can be contacted via email at info@arccosts.co.uk, or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.

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