Recovering Legal Costs
In all legal proceedings, including small claims, fast track claims, and multi-track claims, legal costs and expenses will be incurred. These costs and expenses can include Solicitor’s fees for time spent working on the case, expert fees, and in almost all cases, there will be a Court fee incurred by the parties to the case. The rules and guidance regarding recovering legal costs in civil litigation are set out in the Civil Procedure Rules.
When Can a Party Recover Legal Costs?
In civil litigation, the general rule is that the unsuccessful party will be liable for paying the successful party’s costs and disbursements however, under part 44 of the CPR the Court has discretion as to which costs should be awarded, and the amount of costs recoverable by the receiving party. In order to recover legal costs, you will require an Order permitting you to proceed to detailed assessment. Automatic entitlements to costs also arise when a party discontinues their claim, or when a Part 36 Offer has been made and accepted, which provides the successful party an automatic right to costs.
In order to be successful in recovering legal costs, the winning party must have either accepted a part 36 offer or have obtained an Order for Costs from the Court. Parties also have the option to mutually agree to costs, when settlement offers have been made, before asking the Court to make an order, which is usually made following detailed assessment.
The Detailed Assessment Process
To initiate detailed assessment proceedings in order to recover costs, a Bill of Costs should be prepared and served on the paying party alongside a Notice of Commencement.
Bill of Costs
A Bill of Costs will be required for the detailed assessment procedure. In Multi-Track cases, the new electronic bill of costs will be required. The Bill of Costs will detail the costs incurred by the party and certain information will be required to prepare this bill, such as time records detailing the dates and extent of work carried out by the Solicitor, or litigant in person, and will also include details of disbursement vouchers and Counsel fees. The Bill of Costs should be reasonable and should only include recoverable items.
A litigant in person will be able to claim £19 per hour for work done, or if they can prove financial loss, they should provide evidence of this loss so that it can be converted to an hourly rate on the bill of costs.
CPR 47 PD 5.12 provides guidance on which heads of legal costs are recoverable, however case law also sets precedent on costs which should not be included in a Bill of Costs, such as costs of funding ( Motto & Ors v Trafigura Ltd  EWCA Civ 1150 ), and inter-fee earner discussions which was shown in TUI UK Ltd v Tickell & Others  EWHC 2741 (QB) that they should only be allowed in complex cases.
As soon as the Bill of Costs has been drafted, it should be served with the Notice of Commencement so that you can begin recovering legal costs through detailed assessment proceedings.
CPR 47.9 states that the paying party must serve their Points of Dispute within 21 days of service of the Bill of costs to stipulate their arguments in dispute of the receiving party’s bill of costs. If points of dispute have not been sent by the paying party, the receiving party can apply to the court for a default costs certificate.
You will be entitled to raise points of reply, within 21 days of receipt of the paying party’s points of dispute, if you do not agree with any of their points. The paying and receiving parties should attempt to negotiate and reach an agreement of settlement of costs, however, if an agreement cannot be reached, the receiving party should initiate court proceedings for an assessment of their legal costs within 3 months of the service of the Bill of Costs.
Following the Court assessment of legal costs, the Judge will provide an Order, based on their assessment which will outline the level of costs which should be paid by the paying party.
Will all Legal Costs on the Bill be Recovered?
The level of legal costs recovered will depend on whether the Order has been made on a standard basis or an indemnity basis. If hourly rates within the bill are not affected, it would be reasonable to expect around 70-80% of the bill of costs, however, other factors can influence the level of recoverable costs and reductions may be applied to “large ticket” items on the bill.
How Can ARC Costs Assist?
ARC Costs are highly experienced and have been successful in costs recovery in the majority of our dispute resolution cases. 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.
We can also assist in the negotiation of a bill of costs, irrespective of whether you are a receiving or paying party.
We can be contacted via email at email@example.com, 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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