Recovering costs from the other side

It might surprise you to learn there is no automatic rule which says if you win your case your costs will be paid by the losing side. It happens in the vast majority of cases, but it is not an absolute rule. The practice comes from the affordability of the costs to the losing party, as that party is usually either insured or a trade union member. If there is such financial backing behind a losing party then it is very very likely a costs order will be made against them.

As has been explained elsewhere, not all of your costs may be payable by the other side. If they have agreed to pay costs, or are ordered to pay your costs, they are effectively covering your liability to pay your own solicitor.

Disbursements are subject to a test of reasonableness, and the hourly rate and the time spent are subject to a test of reasonable necessity.

So what if all time spent by your solicitor is not recovered from the other side? Do you have an agreement the solicitor will accept what can be recovered from the other side, or are you liable for the difference. That could be several thousand pounds in a long running case. Some solicitors do believe they are entitled to be paid for every minute they spend on a case, so the promise that you will get all of your compensation might be true, but your solicitor might want some of it back. Ask the question, and ask it this way – you are a professional and know what costs are recoverable, and which are not. As you are the professional will you please manage my case so that all costs and disbursements are recoverable from the other side. Having this conversation will avoid any nasty surprises at the end of the case.

One problem on recovery of costs is the concept of proportionality. This is a very sensible concept in theory, but in practice a little naive. The basic idea is that you should not be spending £5,000 in costs to recover £200. Fair enough you might say as what is the point in that. The trouble is that the legal costs actually reflect the time spent gathering and presenting the evidence in a case. Just because the case is not worth much does not mean this work on the evidence will be straightforward. The concept affects the amount of costs the other side will be ordered to pay, and the use of the concept to date has been inconsistent, so it is difficult to give you guidance. Again your solicitor is in a better position to judge proportionality than you, so have the discussion, and ask “what happens if not all of my costs are recoverable through an unfavourable imposition of the proportionality principle?”

You are asked to take much for granted when you are told, “of course we will recover our costs from the other side”, but there are problems which may have to be faced, and best the answer is known beforehand. Best to use an experienced solicitor you trust.

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