Costs of Litigation Undertaken in the English Courts

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Getting a large bill is not exactly the best celebration for those who have recently been through litigation proceedings.

Happily, most firms, Carlsons Solicitors included, will be extremely upfront about their fees, generally agreeing to payment terms with clients at the very beginning of proceedings.

In reality, the nightmare scenario of a larger-than-expected legal bill rarely transpires.

The mystery of how lawyers charge their fees is almost as old as the profession itself, so, understandably, parties might be apprehensive about the costs of hiring a legal team, as well as the more general costs associated with resolving a dispute in court.

We look at the costs which might be expected during litigation in the English courts, and how these can be funded.

So, what can I expect to pay for during litigation?

Whilst exact fees can vary greatly depending on the details of the case, in a dispute undertaken in an English court, you might pay for some or all of the following:

  • Solicitor’s fees and their expenses
  • Fees for any outside counsel required (such as barristers)
  • Fees for expert witnesses
  • Practical costs associated with the dispute, such as printing and binding of documents, couriers, travel and subsistence, office or meeting room rentals, etc
  • A percentage of the legal expenses of the winning party (if this is not you)
  • Court fees
  • Court hearings (if the case requires it)
  • Enforcement of judgments

How can this be covered?

1. Private funds

Perhaps the most common approach to funding litigation is on a conventional privately paying basis.

Private funds might include your savings and income, or in the case of a commercial dispute, the business entity involved would fund the costs.

If you are not in a position to fund litigation privately, there could be some alternative options, which are covered in more detail below.

2. Insurance

Legal expenses insurance can, to put it simply, cover the costs of your legal action. It can also help with not only your solicitor’s expenses but also the winning party’s expenses if you lose your case. Legal expenses insurance tends to fall into one of two categories:

a. Before the Event (BTE) insurance

As the name suggests, BTE insurance is a policy taken out before the dispute at hand arises, which will cover your legal expenses and the fees of your opponent (if you lose your case) up to the limit on the policy’s cover.

Many business insurance policies (such as public liability, professional indemnity or employers’ liability insurance) have legal expenses built into the policy, or as an optional extra. Some other policies, such as buildings or contents insurance, bank accounts or credit cards and life insurance, might also include cover for legal expenses.

b. After the Event (ATE) insurance

Usually, this is taken out as part of opening the claim with your solicitor, before significant legal costs have been incurred by either side. If your case is unsuccessful, ATE insurance will cover costs you may be ordered to pay to the winning side.

If successful, the premium of the policy then, of course, is absorbed by any figure you may gain. It is not covered in the legal costs you might recover from the losing party.

Having ATE insurance in place can also indicate to the other party that your case has a strong chance of success. In certain scenarios, this could even lead to your opponent settling out of court, or at least contribute to the success of this negotiation.

3. Conditional Fee Agreement (CFA)

“No win, no fee”

To alleviate the worry of a client heading to court with not only the outcome of the case at stake but also the prospect of having to fund their legal team’s fees too, a CFA can be agreed upon beforehand.

Often, this will mean that if the client loses the case, they will not have to pay their lawyer’s fees. It doesn’t release them from having to pay a proportion of the winning party’s fees, however.

“No win, low fee”

Alternatively, some cases could be litigated in a similar fashion, but under a “no win, low fee” basis. This might look like your legal team agreeing to take on the work at a discounted rate, and if the case is won, recouping the difference (and potentially a bonus, too) between the discounted rate and the full rate back from their successful client.

The bonus is often referred to as a ‘success fee’. Clients could end up paying less than, or slightly more than, the agreed costs, depending on the agreement and the outcome of the case.

4. Third-party funding

Whilst third-party funding can be a great way to ensure access to legal advice is more accessible to all, there are jurisdiction-specific rules that govern third-party funding, and care should be taken to adhere to these.

Commercial third-party funding can work similarly to the CFA mentioned in point 3b, where a third-party funder may agree to finance the litigation, and then draw a profit if the case is successful.

5. Crowd-funding & pure funding arrangements

Pure funding arrangements (which include crowd-funding) can enable a party to litigate cases with a strong public interest, perhaps involving human rights, immigration, discrimination and inequality, among others.

In commercial third-party funding, in point 4, the motivation is to invest in the hope of a return; it enables the funded party to litigate and provides added compensation to the funder. Conversely, pure funding does not look to turn a profit. It is intended to make the litigation a reality by covering the funded party’s costs of doing so.

Crowd-funding is, as of yet, uncommon in the UK, and there are currently some gaps in regulations, for example, there might be some problems surrounding who might pay if the crowd-funded party is ordered to pay the other side’s legal costs.

Whilst the legal aid sector has seen major cuts to its budget, some individuals could still be eligible for help with their litigation costs through the government.

It is possible to check your eligibility for civil matters directly on the government website.

Other points to consider before taking on costs associated with litigation

1. Alternative forms of dispute resolution (ADR) could be more suitable

Whilst litigation, in some circumstances, is the best (or only) way forward on a given matter, ADR can sometimes be less costly, less public and provide a quicker solution to your dispute.

Resolving the dispute through arbitration or mediation can be more appropriate than litigation in certain cases, particularly when the matter at hand can be resolved without the need to go through the courts.

2. Even if you are successful, you may still come across difficulties with reimbursement of costs

Whilst the general rule is that the losing party will cover the reasonable costs of the successful party, difficulties with obtaining this are not uncommon. Even where successful parties have an extremely clear-cut case, they will never usually recover 100% of their legal costs.

Furthermore, as with any enforcement action, it is imperative to ensure your opponent actually has the assets to be able to pay. Several enforcement methods, such as a charging order, insolvency proceedings or attachment of earnings could then be applied.

Acting quickly with a freezing injunction or other pre-emptive action, before any assets are moved out of reach, might also be beneficial.

3. Eligibility for legal aid has been reduced in recent years

The well-publicised cuts to legal aid, as mentioned above, have seen a drastic reduction in eligibility for legal aid. As such, this method of funding litigation costs is unlikely to be viable for most cases.

Whilst it may be difficult to secure funding through legal aid, there was a slight uptick in the number of legal aid certificates granted to civil cases in recent years. For criminal cases, legal aid eligibility is means-tested, and this can be checked on the government’s website.

For further information and legal advice specific to an individual case, get in touch with Carlsons Solicitors. As advocates of ADR, we will always ensure your dispute is handled in the way that suits your best interests.

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