When you pursue/defend any type of legal proceedings, legal costs will be accrued. The costs incurred will consist of a variety of legal expenses, such as hourly rate solicitors fees and disbursements. Legal costs will need to be assessed at the end of the case if awarded, unless an order as to costs has already been summarily assessed by the Court. Generally, the losing party will be required to pay the costs of the successful party, though there can be exceptions.

Solicitor/Client Costs

In a large proportion of claims for compensation, clients will enter into a retainer (such as a conditional fee agreement, also known as CFAs) with the legal professional representing them. CFAs also known as a ‘no win, no fee’ agreement. Thus, no payment will be required for their legal representation if your case is unsuccessful. If your case is successful, a proportion of the damages may be payable to the solicitor or legal representative to contribute to payment for their work however, this depends on the level of success fee claimed.  For the avoidance of doubt, in private paying matters, charges will be based on hourly rate charges or any fixed fee agreement reached with the legal representative.

The amount of any deduction from damages due to a CFA will vary depending on the outcome of the matter. The solicitors fee will contribute towards the expenses that they have incurred when providing legal advice and advocating for their client. Solicitors charges can vary depending on the type of matter and solicitor.  Recovery of costs from your opponent in such matters relates to the hourly rate charges incurred by your Solicitor, and with reference to any fixed costs parameters as set out in CPR 45 however, the success fee is only deductible from damages (in the majority of litigation) and cannot be recovered from the paying party.

Alternatively, clients may enter into a Damages Based Agreement (DBA). This is an agreement which states that a solicitor will take a fixed percentage of the damages if the matter is successful. So, the percentage will not vary depending on their fees.  These types of agreements are not very common within the legal profession as they were introduced in LASPO 2012 and are yet to be firmly established.  The extent of recovery of costs incurred from any paying party will however, be capped up to the level of the DBA and often you will not recovery the full extent of deductions taken from your damages.

If you have received legal aid, your legal costs will always be recoverable, atleast to an extent, from the Legal Aid Agency (LAA). However, legal aid does not always cover all of the costs. You may have to pay an upfront fee/contribution to your legal costs for your legal services if you receive a certain level of income, or make a contribution on conclusion if you recover a financial award (such as in ancillary relief or civil disputes).  Costs will however, only be recoverable from a paying party if an inter-partes costs order is made.

In criminal cases, everyone is entitled to free legal advice at the Police station. So, if you receive this, it will not form part of your legal costs.

Recovery of Legal Costs from a Paying Party

The guidelines which govern legal costs procedure (known as detailed assessment) for England and Wales are set out in the Civil Procedure Rules.

The general rule of thumb is that the losing party will pay the costs of the winning party. These costs will consist of items such as legal fees, court fees, Counsel fees and expert fees. This general rule does not apply in all types of cases, and does not apply in the Court of Appeal.

Despite this, there are many instances in which a Court will reduce the amount of costs which can be recovered, when assessing the costs on a standard basis. For example, if the winning party has incurred a disproportionate amount of costs to the matter, or if they have not conducted themselves well throughout the claim.

Furthermore, the court can place sanctions on parties if they have not attempted ADR, so this may impact upon costs recovery, which may manifest itself in the disallowance of some/all of your detailed assessment costs for instance.

The court will also have to consider how much time has been spent on the case, the importance of the case to both parties and the amount of skill which has been utilized. Therefore, it is important to comply with the CPR as non-compliance with the guidelines may result in the court ordering a reduction in costs recovery.

Summary Assessment or Detailed Assessment can take place to assess the amount of costs which are to be recovered by the winning party. The first is a fairly quick process, as the costs officer will consider the amount of costs ordered in one day, and likely at the conclusion of any application hearing or single day Trial. In contrast, Detailed Assessment is a more comprehensive approach, and is completed over a period of time.

Detailed Assessment Procedure

CPR 47 states the procedure for assessment of costs. In High Court, Court of Appeal or Court of Protection matters, the Detailed Assessment will take place at the SCCO.

The first step in the procedure is to provide a costs expert with the file of papers relating to your case. From this, they can prepare the Bill of Costs. This is an itemised document which outlines the costs which have been incurred by a party.

The Bill will be served upon the paying party alongside a Notice of Commencement. This notice will state a date by which the paying party’s Points of Dispute need to be filed. If a party does not respond to this notice and fails to provide their Points of Dispute within this time, a Default Costs Certificate will be filed. So, the paying party would have to pay the Bill in full, thus losing their opportunity to dispute any of the items.

In matters where Points of Dispute are filed, the receiving party can respond with Replies to the Points of Dispute. This document provides the receiving party with an opportunity to defend the costs which the paying party have criticised.

Ideally, a matter will be drawing to a close at this point and it is hoped that parties will have come to an agreement on the amount of costs to be paid. Though on more complex cases, this can be difficult. Thus, Alternative Dispute Resolution methods such as mediation are recommended. If these methods are not attempted, the court can be quite displeased.

If ADR has been pursued, and has been ineffective, an application for court proceedings can be made. If the Bill of Costs is under £75,000 in value, a Provisional Assessment will occur. This assessment is completed on paper, so court attendance is not necessary. Alternatively, if the Bill of Costs is valued at above this figure, a Detailed Assessment hearing will take place in court. At this hearing, a costs judge will decide the amount of costs payable.

Why Choose ARC Legal Costs Experts?

Our team of experienced Costs Lawyers and Costs draftsmen have over 20 years’ of legal costs drafting and negotiation experience. We can assist you whether your are the paying party or the receiving party in any legal case, and as independent experts, can provide input from the very outset of your dispute, all the way to providing representation at any detailed assessment hearing.

If you require assistance with your legal costs, please contact us at 01204 397302 or email one of our experts at info@arccosts.co.uk.

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