When to Involve Legal Costs Specialists in a Commercial Dispute

In commercial litigation, costs are rarely incidental. They are often significant, closely scrutinised, and capable of influencing settlement strategy as much as the merits of the dispute itself. Yet many parties only consider involving legal costs specialists once a dispute over costs has already arisen.

From our experience, the most commercially effective approach is to involve specialist costs support at key stages throughout the lifecycle of a commercial dispute. Early engagement protects recoverability, reduces exposure, and provides clarity in situations where costs risk can quickly escalate.

ARC Costs explains when it is sensible to involve a costs specialist in a commercial dispute and why timing can materially affect the outcome.

At the Outset: Assessing Costs Risk and Strategy

Commercial disputes frequently involve high-value claims, complex contractual issues, and reputational considerations. Before proceedings are even issued, it is sensible to consider:

• the likely scale of recoverable costs,

• the proportionality of anticipated expenditure,

• the risk of adverse costs exposure, and

• the commercial appetite for protracted litigation.

Early input from legal costs specialists allows parties to align litigation strategy with realistic cost recovery prospects. This is particularly important where the sums in issue are significant but not unlimited, and where legal spend must be justified internally to boards or stakeholders.

Involving a costs specialist at the outset ensures that the dispute is approached not only from a legal standpoint, but from a financial and risk-management perspective.

Before and During Costs Budgeting

In multi-track commercial litigation, cost budgeting can be decisive. Once approved by the court, a budget can restrict recovery unless there is good reason to depart from it.

Specialist involvement is particularly valuable when:

• preparing the initial costs budget,

• analysing the opponent’s budget,

• negotiating figures prior to the case management conference, and

• considering whether a variation is required due to developments in the case.

Commercial disputes often evolve unpredictably. Amendments to pleadings, disclosure disputes, or interim applications can significantly increase costs. A costs specialist can ensure that these developments are properly captured and justified within the budgeting framework.

Failing to manage this stage properly can result in substantial unrecoverable expenditure.

When the Dispute Escalates Procedurally

Commercial disputes frequently involve interlocutory applications, disclosure battles, and contested interim relief. Each procedural step carries costs implications.

Specialist costs input becomes particularly important where:

• the opponent’s conduct has generated additional work,

• there is extensive disclosure involving large volumes of electronic documents,

• expert evidence is required in technical or financial areas, or

• senior fee earner involvement increases.

A costs specialist can advise on how to structure and record work so that it remains defensible at a later assessment. This forward-looking approach often determines whether costs are ultimately recoverable.

Preparing for Settlement Negotiations

Costs can be a powerful negotiating tool in commercial disputes. Parties often focus on damages or contractual sums, but costs exposure can materially shift the balance in negotiations.

Involving legal costs specialists at this stage allows parties to:

• evaluate likely recoverable figures,

• assess the risks of proceeding to trial,

• quantify adverse costs exposure, and

• use costs strategically in settlement discussions.

A realistic understanding of potential recovery or liability often narrows the gap between parties and promotes commercially sensible resolutions.

When Preparing a Bill of Costs

If the dispute concludes with a costs order, the preparation of a Bill of Costs becomes critical. In commercial disputes, these Bills are often substantial and heavily scrutinised by paying parties.

Specialist involvement at this stage ensures that:

• the Bill is compliant and accurately reflects the work undertaken,

• senior time is properly justified,

• delegation decisions are defensible, and

• proportionality is addressed proactively.

A well-prepared Bill frequently leads to more efficient negotiations and reduces the likelihood of protracted disputes.

When Served with Points of Dispute

If acting for the receiving party and served with Points of Dispute, specialist input is strongly recommended. Commercial defendants often take detailed and technical points, challenging hourly rates, duplication, proportionality, and the necessity of work undertaken.

Costs specialists understand how these challenges are likely to be viewed by the court and can assist in preparing focused, persuasive replies that protect the claim while avoiding unnecessary escalation.

Responding effectively at this stage often determines whether the matter resolves by agreement or proceeds to assessment.

When Acting for the Paying Party

Commercial entities facing significant adverse costs exposure should not assume that an opponent’s Bill is beyond challenge.

Specialist costs advice is particularly valuable where:

• the Bill appears disproportionate to the sums in issue,

• there has been heavy partner or senior solicitor involvement,

• there are concerns about duplication or inefficiency, or

• settlement negotiations have broken down.

A targeted and evidence-based approach to challenging costs can often achieve meaningful reductions without the need for a full hearing.

Before Detailed Assessment

If agreement cannot be reached, the matter may proceed to detailed assessment. This is a specialist forum where procedural precision and technical understanding are essential.

Involving legal costs specialists before a detailed assessment allows for:

• structured preparation of arguments,

• identification of strong and weak points,

• strategic concessions where appropriate, and

• focused advocacy before the costs judge.

Commercial disputes often involve complex factual matrices and significant documentation. Presenting costs arguments clearly and proportionately can materially affect the outcome.

Where Reputational or Regulatory Issues Arise

Some commercial disputes extend beyond pure financial considerations. Cases involving allegations of fraud, breach of fiduciary duty, shareholder disputes, or regulatory issues may have reputational consequences.

In such matters, costs may be justified at a higher level than in routine contractual claims. A costs specialist can assist in articulating why the litigation carried wider significance and why the level of expenditure was reasonable in context.

Why Early Engagement Matters

The common theme across commercial litigation is that late involvement limits options. Once costs have been incurred and recorded in a particular way, they cannot easily be reshaped.

By contrast, early engagement allows:

• strategic delegation decisions,

• careful monitoring of expenditure,

• proactive proportionality management, and

• alignment of litigation strategy with financial objectives.

In commercial disputes, where margins and risk exposure matter, this can have a measurable impact on the bottom line.

How ARC Costs Can Assist

ARC Costs provides specialist support in commercial disputes at every stage of the litigation process. We work with law firms, in-house counsel, insurers, and corporate clients to manage costs risk proactively and strategically.

Our services include:

• advising on costs exposure and recovery strategy at the outset of a dispute,

• preparing and negotiating costs budgets,

• drafting and defending Bills of Costs,

• advising on and responding to Points of Dispute, and

• representing clients at detailed assessment hearings.

  Involving ARC Costs at the right time allows commercial parties to gain clarity over their financial position and confidence that their costs strategy aligns with their broader litigation objectives.