Your Legal Costs Recovery Inter-Partes

Inter partes costs recovery refers to the process by which one party in litigation seeks to recover its legal costs from the opposing party. The general principle is that the losing party will usually be ordered to pay the winning party’s costs (pursuant to CPR 44.2(2)(a)), though the Court retains broad discretion to depart from this rule based on the specific circumstances of the case.  In this article, we advise on how ARC Costs can assist with recovery of your legal costs if you are successful in your claim.

The overriding objective, pursuant to CPR 1, stipulates there must be procedural fairness, and the Court will consider factors such as the conduct of the parties, whether the winner succeeded on all issues or only some, and whether any offers to settle were made but unreasonably rejected, when deciding on the final costs order to be made.  In the event the successful party is not considered wholly successful, an issue-based or percentage costs order may be made by the Court, such that the Receiving Party can only recover a proportion of their costs.

Costs are assessed on either the standard basis or the indemnity basis. Under the standard basis (and this is the default for most types of proceedings), the costs must be both reasonable and proportionate, with any doubts resolved in favour of the Paying Party. This approach ensures that costs do not become excessive or oppressive. In contrast, costs assessed on the indemnity basis need only be reasonable but do not have to be proportionate, and any doubts are resolved in favour of the Receiving Party.  Such assessment orders are generally only made in cases where misconduct issues arise, or if the Receiving Party has beaten their own Part 36 Offer on judgment being handed down.

Detailed Assessment of Costs Process

Once a costs order/agreement has been made for a liability to pay costs, a process then ensues whereby costs need to be quantified or agreed.  This can be done informally, or if agreement cannot be reached, the parties need to proceed down the route of detailed assessment.

There are two primary methods for assessing costs: summary assessment and detailed assessment. Summary assessment is a quicker process and is generally used for short hearings, such as interim applications lasting one day or less.  This means that costs are dealt with there and then at a hearing, and no further action is required to agree costs.

Detailed assessment, on the other hand, is a more extensive process used in complex or high-value cases where costs are disputed.

CPR 47 applies when a party seeks to recover costs from another party under a costs order, but the amount is disputed. This usually follows the principle that “costs follow the event,” meaning the losing party must pay the winning party’s reasonable costs. If parties cannot agree on the sum, a detailed assessment under CPR 47 is required.

The Receiving Party must start detailed assessment proceedings within three months of the final costs order (though late service is possible, subject to interest sanctions under CPR 47.8. This is done by serving a Notice of Commencement (Form N252) along with a bill of your legal costs, which provides a detailed breakdown of the legal costs incurred.  This requires the input of an expert Costs Draftsman or Costs Lawyer, to independently quantify/verify the costs.

The Paying Party then has 21 days to respond with Points of Dispute, challenging specific items in the bill. If they fail to respond, the Receiving Party can seek a Default Costs Certificate, allowing them to recover the full amount without further argument.

If Points of Dispute are raised and the parties still cannot agree costs (and it is important to note that negotiations can take place at any time to negotiate your legal costs), the matter can proceed to a detailed assessment hearing before a Costs Judge or Master. After hearing arguments from both parties (either in paper from on provisional assessment, or via oral submissions at an attended detailed assessment hearing), the Court issues a Final Costs Certificate, specifying the amount the Paying Party must pay.

Once the Final Costs Certificate is issued, the Paying Party must usually pay your legal costs as assessed within 14 days, unless the Court orders otherwise.

Case Study – Recovery of Solicitors’ Costs Regarding a Road Traffic Accident Claim

ARC Costs regularly assists Receiving Parties in recovering their legal fees.  We recently assisted a Solicitor client in recovering inter partes costs following a serious road traffic accident. The Claimant, while riding his motorcycle in slow-moving traffic, was involved in a collision when the Defendant, driving a car in the same direction, made a right turn into his path.

As a result, the Claimant was thrown from his motorcycle, suffering significant injuries, including a traumatic brain injury, cervical spine fractures, multiple limb fractures, rib fractures, and psychological trauma. The Claimant alleged that the Defendant was negligent in making an unsafe right turn without indicating or checking mirrors.

The Claimant’s solicitors requested medical and police records, and a Letter of Claim was served on the Defendant. The Defendant subsequently made a Calderbank offer of £200,000. After Counsel’s advice, the Claimant’s Solicitors accepted the offer, resolving the claim save for costs.

Following this, our team at ARC Costs were instructed to settle the Bill of Costs which was completed with two weeks, and drafted in a sum of circa. £78,000. The Bill was settled at £66,500, and £13,000 above our bottom valuation of the claim. As a result, our team achieved a positive recovery for our client through their negotiation skills and managed a turnaround of drafting of the bill to settlement, in less than a month.

How can ARC Costs Assist in Recovering Your Legal Costs?

ARC Costs are an experienced and independent team of specialised Costs Draftsmen and Costs Lawyers. As independent experts, we can assist either Paying or Receiving parties in resolving costs disputes.

For Receiving Parties we are adept at preparing Costs Budgets and Bill of Costs, as well as providing legal costs negotiations services and preparing Points of Reply.  Ultimately we can ensure your legal costs are recovered to the maximum degree possible, and we will always advise on appropriate settlement parameters from the outset for you to determine to what degree you can expect recovery of your legal costs.

Similarly if instructed by the Paying Party, we are adept at settling Points of Dispute, and conducting negotiations to reduce your exposure to legal costs.

If you would like more information on any of our services or wish to speak to a member of our expert costs team about your legal costs, then please do not hesitate to contact us. Please call one of our independent experts at 01204 397302, or email one of our costs experts direct on info@arccosts.co.uk.

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