Can I Recover My Costs in an Issued Claim?

Yes, in many cases, you can seek to recover your legal costs, but it depends on the type of claim, how it’s resolved, and whether the court agrees.

The general rule in civil claims is that the losing party pays a large percentage of the winning party’s reasonable legal costs. This includes solicitor fees, court fees, and where applicable, disbursements such as the fees of experts to produce reports and barristers to advocate at hearings on your behalf.

However, an award of costs when successful is not automatic. The court retains full discretion on whether or not to award costs and factors such as each party’s conduct, how the case was handled, and whether reasonable attempts to settle the dispute were made, will be considered in determining whether or not to make a costs order.

For example, if a party wins their case but acted unreasonably during proceedings, such as by ignoring settlement offers or missing deadlines, the court may reduce the amount of costs they’re awarded or order each party to cover their own.

Contrastingly, the tactical use of fair settlement offers can result in percentage uplifts and increased awards in recognition of a party’s attempts to settle the dispute and avoid incurring the court’s precious resources.

There are also different schemes and allowances of costs recovery depending on which track the court allocates your claim to, which primarily boils down to the value and complexity of your claim.

If the claim is allocated to the Small Claims Track (generally claims under £10,000), costs recovery is limited. In these cases, you can usually only recover fixed costs such as court fees you paid to issue and progress the claim, and certain expenses such as potentially expert fees, but importantly, not solicitor or barrister fees.

For claims allocated to the Fast Track (generally claims between £10,000 and £25,000 in value and which can be tried in a single day) and Intermediate Track (generally claims between £25,001 and £100,000, which can be tried within 3 days), there are cost recovery tables with set formulas from which you can calculate an estimation of the legal costs you would be awarded at each stage in the proceedings that your claim settles or if it proceeds to trial. The tables fix the legal costs that you receive irrespective of how much you actually spend.

In claims allocated to the Multi-Track (generally claims above £100,000 in value or complicated claims that cannot be tried within 3 days),, the usual costs rules apply where the courts generally follow the “loser pays” principle. Early on in a Multi-Track claim, the court will request the parties to propose cost budgets to trial based on assumptions in the case, such as the number of documents that will be disclosed or witnesses giving evidence. The court will then after review and consideration of what is reasonable and proportionate, amend as necessary and fix the parties’ budgets, with the parties then expected to ensure their spending is within that budget unless new circumstances arise that provide good reason to apply for an increase.

Where a claim is issued against you and you are concerned about the claimant’s ability to pay your costs if you successfully defend the claim, you may be able to apply for security for costs. Security for costs requires the claimant to pay money into court or provide a guarantee that they will cover your legal costs in the event you do successfully defend the claim. If the court orders security for costs,the claim will not proceed unless or until the security is paid or provided .

Importantly, there is nearly always an unrecoverable element of costs – a small difference between what you actually spend and what you are awarded even if successful. Further, if you are awarded costs against a party you will still need to enforce the judgment, which can be tricky if your opponent has limited assets or funds. These factors need to be taken into consideration before issuing and during a claim and particularly when forming a reasonable strategy toward settlement – sometimes it is better to agree to accept what someone can pay now than spend money pursuing a piece of paper (a judgment) that you can’t do anything with.

Whilst the above is from the perspective of what you can be awarded, it should also give you an idea of the risk you would be taking if your claim fails. Costs rules are complicated and there are many factors including your prospects of success and recoverability that need to be considered before issuing a claim or making a decision on how to progress or attempt to settle your claim. Particularly where your claim is worth more than £10,000 it is nearly always worth investing in the advice of a solicitor.

If you are in a dispute, maximising the pressure you can exert, and the value of your claim, are of paramount importance. Our team are expert litigators and act nationally. We’re well placed to assist and to advise on your best next steps if you’re facing a claim, including exploring how to maximise costs recovery.