Costs in Civil Litigation

Costs in civil litigation is a vast subject and has just been subjected to a year long review ordered by the government into ways in which the system can be made fairer. At the moment, the general rule is that ‘costs follow the event.’ This means that the party who wins the action is entitled to recover their legal costs from the losing party.

It should be noted that this is often subject to the judge’s discretion, and costs must be ‘reasonable.’ This means that the court will assess the conduct of the parties before and during the litigation process, any efforts that were made to resolve the dispute, the complexity of the matter, the time spent on the case, the geographical location of the lawyers, the importance of the matter to the respective parties, and the value of the property which is the subject of litigation.

Costs That Can be Claimed

Successful parties to litigation can expect to recover solicitor’s and barrister’s fees, fees paid to expert witnesses, professional fees relating to non-witness experts, and in some cases ‘success fees’ which is an uplift paid to the winning party’s lawyers.

Access to Justice?

The system in England and Wales has often been criticized for leaving both parties at risk on costs in litigation. For example, a homeowner may take a local authority to court over an increasingly smelly rubbish dump near their home and be left saddled with the huge cost of the council’s entire litigation bill if they don’t win. This has often been seen as hindering access to justice.

Particular Cases

Although the rule that ‘costs follow the event’ is observed in fast track and multi track claims (i.e. claims that are complex or with a value of over £15,000) cases in the small claims court are different. The costs in small claims cases are fixed, and are only awarded up to a certain limit. For example, an expert in the small claims court will only be entitled to claim a fee up to £200, and there are fixed costs for legal fees too. In fast track cases (up to £25,000 and the trial not considered to last more than one day) the costs of the trial are fixed, whereas the preparatory work is not.

Costs Taxation

In complex civil litigation, court costs can be subject to ‘taxation’. This has nothing to do with the Inland Revenue, but is a system whereby the winning party has to provide the court with a breakdown of the costs incurred in preparing and running the case. Usually, a law costs draftsman will prepare this document, known as a ‘bill of costs.’ Once this has been prepared, either a taxing judge or a district judge will assess the costs, taking into account the ‘reasonableness’ factors as outlined above. In a high proportion of cases, the judge allows at least 80% of the costs, but if the reasonableness test is not met, the claim can be significantly reduced. Once the order for costs has been made by the judge, this debt becomes enforceable against the losing party and can be enforced in the usual way. For more information about debt recovery enforcement, see the page on this website entitled ‘Enforcing A Court Order.’

No Win No Fee

If a civil claim is subject to a no-win, no-fee arrangement, this means that the successful party will reclaim their costs from the losing party. Again, this type of fee arrangement is subject to review by the government and may in the future be reformed. The problems have arisen in cases where there are substantial ‘success fees’, i.e. where the lawyers who win the case claim an uplift on their costs for having been successful in the case. This system has been known to work well in cases in which otherwise impecunious clients would not have been able to seek justice but reform has already begun. The government is likely to push through legislation that prevents success fees in libel cases from being up to 100% down to just 10%; and personal injury success fees may be capped at 25%.