As lawyers, Woolley & Co are often asked, “If I win my case, will I be able to recover the amount I have spent on legal fees?” The simple answer is, “You can usually expect the court to order your opponent to refund the majority of your costs, but not all of them, and there are no guarantees.”

 

The fact is that the law on what costs you can recover is very complicated – whole books have been written on it - and it is not unusual for there to be a lengthy hearing to decide on all the issues.

 

The first point to consider is how much your case is worth or, more precisely, what “track” the court allocates it to. Defended cases are allocated to one of three tracks (the small claims track, the fast track and the multi-track) and different court procedures apply to each of them.

 

The rules on what costs you can recover if you win depend on the track. The small claims track is generally for cases worth less than £5,000 and you cannot expect to recover much more than the court fee. The fast track is generally for cases worth between £5,000 and £15,000 and the amount of costs that can be recovered are somewhat limited.

 

Even if your case is worth more than £15,000 and in the multi-track, you cannot expect to recover everything. The general rule is that the loser pays a contribution towards the winner’s costs. However, this rule is not always followed and it is within the discretion of the judge to make a different order – and they frequently do.

 

Often you may make an application in the course of proceedings. For example, you may think the other party are hiding some important documents which are important to your case. You therefore make an application to get the court to order your opponent to disclose them. If the judge disagrees with you and refuses to make the order, he will normally order you to make a contribution to your opponent’s costs in respect of that application and to do so within 14 days. This is regardless of whether you win or lose the case at the end of the day.

 

It is also usual for a court case to consist of a number of issues. If your case goes to trial and you win on some issues but lose on others, the court may reduce the costs you could otherwise recover by a percentage decided by the judge, even if you win overall.

 

Another principle that applies to costs is that you can only generally recover costs that are reasonable and proportionate. The usual way this works is as follows and is best considered by an example.

 

Assume you were claiming damages of £40,000. You won your case and your legal costs were £50,000.

 

The court will first decide what is a proportionate amount of costs for your opponent to pay, which is mainly based on the value of the case and how difficult it is. A general rule of thumb is that it is proportionate for the costs to equal the value of the case. In the example given above, let us assume that the judge finds that £40,000 is a proportionate amount of costs.

 

Generally speaking, the smaller the value of a case, the greater the amount of costs that would be proportionate. For example, if you were claiming £16,000, the court may well find that costs of say £20,000 or even higher are proportionate. But remember that this is not always the case.

 

The judge will then go through everything that was done in your case, item by item, and decide, up to the amount he considers proportionate, whether it is reasonable for your opponent to refund those costs and, if so, what a reasonable amount for them to pay towards them would be.

 

In our example, in respect of the work done up to £40,000, the judge will ask himself three main questions: was it reasonable for this work to be done, if so, is it reasonable for the losing party to pay towards it and, if so, what is a reasonable amount they should pay towards it.

 

If costs exceed the amount the judge considers proportionate, then he will go through these extra costs and only order your opponent to reimburse those items he considers were necessary and only allow a reasonable amount for them.

 

In our example, in respect of the extra £10,000, the judge will ask himself three main questions: was it necessary for this work to be done, if so, is it reasonable for the losing party to pay towards it and, if so, what is a reasonable amount they should pay towards it.

 

If costs are likely to exceed a proportionate amount therefore, you can only expert to be reimbursed for work that was necessary to do rather than just reasonable.

 

The court may also increase or reduce the amount your opponent is ordered to pay you for a number of other reasons, such as:

• the conduct of each party towards the dispute before the proceedings were started,
• the way they conducted the proceedings,
• the efforts made to settle the case,
• the importance of the case to the parties,
• the complexity of the case and/or whether it involved particular skill, effort or specialised knowledge and the place or circumstances where the work was done.

You can see therefore that the question of how much of your costs you can recover is very complicated and has a bearing on the way a case is handled right from the outset. It is important to find a solicitor who understands all the factors that can influence the amount of costs you can recover and conducts your case with this in mind. This is especially important when you realise that it is not uncommon, especially in smaller cases, for legal costs to equal or even exceed the value of the case itself. You want to ensure that you are likely to recover as much of those costs as you possibly can. If you are involved in a dispute and would like specialist advice contact gary.cousins@business-lawfirm.co.uk at Woolley & Co on 0121 778 3212.