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Costs AdvisorCosts Advisor is the online knowledge centre for your commonly asked questions and information on funding and legal costs.The information set out in Costs Advisor is the opinion of the writers and contributers and is for guidance only and is not legal advice. For advice and assistance a Costs Lawyer should be consulted. If the answer to your question is not presently posted, please email to us at jason.osborn@costsmanager.com and we will endeavour to post the question and response in due course. Please revisit Costs Advisor as the service will be expanding considerably over the coming months.
Why do I have to pay my opponent's costs?In the UK, we operate a system whereby the loser in a dispute is usually ordered to pay the winner's costs, subject to those costs being reasonable. This contrasts with other jurisdictions, such as in the USA where a lawyer often charges his client a percentage of any monies he is able to recover for his client. How much do I have to pay for my solicitor/my opponent's solicitor's legal costs?This depends upon how much work a solicitor has undertaken on a case. Solicitors generally work upon the basis of an hourly rate, with their time broken down into tenths of an hour or 6 minute units. For example, a routine letter or telephone call is charged as a 1 minute unit, i.e. a tenth of the solicitor's hourly rate. If a call or letter incurs more than 6 minutes of time then further units are charged as appropriate. The hourly rates are generally made up of two elements:-
Below is a table of guideline hourly rates you can expect to pay a solicitor, depending upon that solicitor's experience and location. There are three bands outside the London area, and a further three bands within the London area, with details of the localities included in each band. In each band there are four columns specifying figures for different grades of fee earner. The guideline figures have been grouped according to locality by way of general guidance only. Although many firms may be comparable with others in the same locality, some of them will not be. For example, a firm located in the City of London which specialises in fast track personal injury claims may not be comparable with other firms in that locality that may pratice Commercial law. Grades of fee earner The grades of fee earner have been agreed between representatives of the Supreme Court Costs Office, the Association of District Judges and the Law Society. The categories are as follows:
"Legal Executive" means a Fellow of the Institute of Legal Executives. Those who are not Fellows of the Institute are not entitled to call themselves legal executives and in principle are therefore not entitled to the same hourly rate as a legal executive. Unqualified clerks who are fee earners of equivalent experience may be entitled to similar rates and in this regard it should be borne in mind that Fellows of the Institute of Legal Executives generally spend two years in a solicitor’s office before passing their Part 1 general examinations, spend a further two years before passing the Part 2 specialist examinations and then complete a further two years in practice before being able to become Fellows. Fellows therefore possess considerable practical experience and academic achievement. Clerks without the equivalent experience of legal executives will be treated as being in the bottom grade of fee earner, i.e. trainee solicitors and fee earners of equivalent experience. Whether or not a fee earner has equivalent experience is ultimately a matter for the discretion of the court. An hourly rate in excess of the guideline figures may be appropriate for Grade A fee earners in substantial and complex litigation where other factors, including the value of the litigation, the level of complexity, the urgency or importance of the matter as well as any international element would justify a significantly higher rate to reflect higher average costs.
Aldershot, Farnham, Bournemouth (including Poole)
Bath, Cheltenham and Gloucester, Taunton, Yeovil
Birmingham Outer
What are disbursements?In addition to a solicitor's profit costs, a client is also responsible for any out of pocket fees and expenses that his solicitor incurs on behalf of the client, for example, court fees, expert's fees, etc. Such items are known as disbursements. These are also recoverable from the losing party in a dispute to the extent that they have been reasonably incurred and are reasonable in amount. If a case fails to be dealt with under the predictive costs regime then a party is limited as to the type of disbursement he can recover. What are counsel's fee?It is not uncommon for a solicitor dealing with a case to instruct a barrister (known as counsel), perhaps to advise on a particular point of law, to assess the value of a case or to draft pleadings. If a case proceeds to a trial it will almost always be conducted by counsel. How much are counsel's fees?Counsel's fees are usually calculated by reference to an hourly rate and the time spent by counsel. The hourly rate will vary depending upon counsel's location and experience - expect to pay between £125 and £175 per hour, although specialist counsel or Queen's Counsel have much higher rates. Where counsel attends court then his fee is known as a brief fee and is based upon the time spent preparing for the hearing together with the anticipated length of the hearing. If the trial lasts more than one day then counsel will seek a further fee known as a "refresher" which covers his fees for that day. Please be aware that a court 'day' is made up of just 5 hours. Brief fees are one area where counsel is very much open to negotiation of his fees and you should not simply agree the first fee quote that is put to you by counsel's clerk. If counsel is instructed to attend a matter which has been allocated to the "Fast track", then his fees are fixed in accordance with the Civil Procedure Rules. From 1 October 2007, the fixed fees are as follows:
For the purpose of quantifying Fast track trial costs awarded to a Claimant, the value of the claim is the total amount of the judgment excluding interest and costs and any reduction made for contributory negligence. For the purpose of quantifying Fast track trial costs awarded to a Defendant, the value of the claim is the amount specified in the claim form (excluding interest and costs); if no amount is specified, the maximum amount which the Claimant reasonably expected to recover according to the statement of value included in the claim form; or more than £10,000 if the claim form states that the Claimant cannot reasonably say how much he expects to recover. Do I have to pay VAT on solicitor's fees?The legal services which solicitors and counsel provide are vatable. Some disbursements also attract VAT, although court fees do not. If you are paying your opponent's legal costs then it is the VAT status of your opponent that determines who pays the VAT. If your opponent is VAT registered then he should be paying the VAT, not withstanding that he may seek to recover the net element of the charges from you. If your opponent is not VAT registered then you have to pay both the net amount and the VAT. What are "predictable" or "fixed" costs?There are certain types of cases where the Civil Procedure rules prescribe the amount of costs payable, as follows:- Road traffic accidentsThese rules are applicable to any road traffic accident that occurred after 6 October 2003, where the case settles without the need for litigation, and where the amount of the settlement is more than £1,000 but less than £10,000. The costs payable are made up of a flat fee of £800; plus 20% of the settlement upto £5000; plus 15% of any settlement between £5000 and £10,000. Where both the Claimant and his solicitor reside in the London area (as defined within the Costs Practice Direction) then an additional weighting allowance of 12.5% is payable. These figures are exclusive of VAT. Certain disbursements are also allowable, although the amount in monetary terms is not fixed. These are the costs of obtaining medical records; a medical report; a police report; an engineer's report; a search of the records of the Driver Vehicle Licensing Authority; a premium for a policy of After the Event insurance (ATE). No other disbursements will generally be allowed unless the Claimant can clearly demonstrate it was necessary due to a particular feature of the case. Where a Claimant has entered into a Conditional Fee Agreement then he may also recover a success fee, fixed at 12.5%. If a road traffic claim is litigated then the predictable costs set out above no longer apply, save for the success fee which remains fixed at 12.5% unless the case proceeds to a trial where the success fee allowed increases to 100%. Counsel's success fees are also fixed although the fee differs according to whether the case was allocated to Fast track or Multi track and the stage at which any settlement is achieved:
Fast Track Cases If counsel is instructed to attend a matter which has been allocated to the "Fast track", then his fees are fixed in accordance with the Civil Procedure Rules. From 1 October 2007, the fixed fees are as follows:
For the purpose of quantifying Fast track trial costs awarded to a Claimant, the value of the claim is the total amount of the judgment excluding interest and costs and any reduction made for contributory negligence. For the purpose of quantifying Fast track trial costs awarded to a Defendant, the value of the claim is the amount specified in the claim form (excluding interest and costs); if no amount is specified, the maximum amount which the Claimant reasonably expected to recover according to the statement of value included in the claim form; or more than £10,000 if the claim form states that the Claimant cannot reasonably say how much he expects to recover. Employers Liability CasesIf a case is brought under a Conditional Fee Agreement then there are fixed success fees for employers liability cases where the accident occurred on or after 1 October 2004. This section does not apply to disease cases (see below) or to cases allocated to the Small Claims track. The fixed success fee for the solicitor is 25% (or 27.5% if the case is brought under a Collective Conditional Fee Agreement (usually Trade Union funded cases)) unless the case proceeds to a trial where the success fee allowed increases to 100%. Counsel's success fees are also fixed although the fee differs according to whether the case was allocated to Fast track or Multi track and the stage at which any settlement is achieved:
Industrial disease cases If a case is being brought under a Conditional Fee Agreement then there are fixed success fees for industrial disease cases where the letter of claim is submitted on or after 1 October 2005. The fixed success fee for the solicitor is dependent upon the type of disease for which damages are being sought, with claims falling into one of three categories:-
The solicitor's fixed success fees are as follows:-
Counsel's success fees are also fixed although the fee differs according to whether the case was allocated to Fast track or Multi track, the stage at which any settlement is achieved, and the type of disease:
What is a CFA?A CFA, properly known as a Conditional Fee Agreement and often described as a no-win no-fee agreement, is a type of funding arrangement between a client and his solicitor whereby the solicitor's fees are dependant upon an agreed set of events occurring, usually a win for the client. These types of agreement are prevalent in personal injury work. These arrangements usually give rise to the solicitor charging his client an additional amount of money in the event of a win, known as a success fee. This success fee if usually recoverable, in whole or in part, from the losing party in a dispute subject to the reasonableness of the success fee being sought. Prior to October 2005, there were onerous obligations placed upon those solicitors who entered into conditional fee agreements with their clients and many solicitors failed to properly adhere to the regulations in place at the time. The result is that many conditional fee agreements have been found to be unenforceable and a paying party should ensure that there is a legitimate agreement in place before agreeing and paying any costs. |
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